Chapter 10 - Interest Rates and Mortgages

Question 1

constant payment mortgages

Answer 1

mortgage loan that is repaid by equal and consecutive instalments that include principal and interest

Question 2

equivalent interest rates

Answer 2

different interest rates that result in same effective annual interest rate.

Question 3

4 components of constant payment mortgage loans

Answer 3

1. loan amount
2. nominal rate of interest
3. amortization period
4. payment

Question 4

calculate outstanding balance (OSB)

Answer 4

1. interest rate conversion mate payment frequency
2. calculate payment based on contract rate, loan, amortization
3. re-enter rounded payment
4. calculate OSB using INPUT and AMORT

Question 5

accelerated biweekly payments

Answer 5

payments equal to half the regular monthly payment and paid every 2 weeks