Question: a. Discuss two risks that a lender may face if he offers a fixed-rate mortgage loan to a borrower. (4 marks) b. Can the lender

a. Discuss two risks that a lender may face if he offers a fixed-rate mortgage loan to a borrower. (4 marks) b. Can the lender use the price-level adjusted mortgage (PLAM) to reduce the risks you mentioned in (a)? Explain. (4 marks) c. Discuss two limitations of PLAM. (4 marks) d. If you are going to borrow, would you prefer an adjustable rate mortgage to a fixed rate mortgage? Explain. (8 marks)

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