1. Assuming all APRs equal, the effective interest rate on a loan is highest when:

1. The loan has no points and a 30 year maturity and is prepaid in five years
2. The loan has no points and is prepaid at maturity
3. Points are charged and the loan is paid off at maturity in 30 years
4. Points are charged and the loan has a 30 year maturity but prepaid in five years

2. What is the yield to the lender on a $1,000,000 loan at 10 percent with monthly payments over 20 years if 5 points are charged at origination if the loan is paid (without penalty) at the end of the sixth year, rather than held to maturity?
   1. 9.80 percent
   2. 10.00 percent
   3. 11.21 percent
   4. 11.50 percent
   5. 11.64 percent