Question: Suppose a borrower with two mortgages defaults. At the time of the default, the first lien has a balance of $200,000, the second lien has

Suppose a borrower with two mortgages defaults. At the time of the default, the first lien has a balance of $200,000, the second lien has a balance of $50,000. The borrower owes $5,000 in property taxes. The house sells for $150,000 in a foreclosure auction. How much of a deficiency will the first lien lender have? 5. Suppose you deposit $50,000 once at an annual interest rate of r-2.40% compounded monthly. How much will you have in 30 years? 6. Suppose you save $500 everyweeklianotoncel to your bank account. The bank pays you 3% compounded y to the same account. How much money will you have in your bank account in 35 years? (Note: there are 52 weeks in a year) 7. Suppose you buy a 30 year zero coupon bond with a face value of S1000 and a 4% annual interest rate compounded semi-annually. The moment after you buythe bond, the interest rate falls to 3%, compounded semi- annually, What is the percent change in the bond price? A bank offers a 30 year annuity, with monthly payments of $2,000 starting 1 year from today. If the annual discount rate is 5%, compounded monthly, how much should this annuity cost today? 8

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