Question: Ned Shred, founder of Shred Mountain Bikes, has made his fortune and is looking for a place to invest his wealth. Ned is considering

Ned Shred, founder of Shred Mountain Bikes, has made his fortune and

Ned Shred, founder of Shred Mountain Bikes, has made his fortune and is looking for a place to invest his wealth. Ned is considering investing in a mortgage by lending $250,000 to his sister Shelley. Ned will charge Shelley interest at 8.5% per annum, compounded semi-annually. The loan will have monthly payments based on a 20-year amortization and a 3-year term. Ned has discovered that he can deposit all of the payments he receives from the loan into an account that bears interest at a rate of 9% per annum, compounded monthly. 19. If Shelley makes all of her monthly payments on time, and Ned deposits all of all the payments into the account described above, what yield will Ned have earned on his investment at the end of the term of the loan? Express Ned's yield as a nominal rate per annum, compounded monthly. (1) 9.00% (2) 8.25% (3) 8.76% (4) 8.44%

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