Math (Expected Yield)

Question 1

A private investor expects to receive $281.72 per month for a period of 17 years as a result of a mortgage loan she has just advanced. Calculate the investor’s expected yield (expressed as a nominal rate with semi- annual compounding) on her investment if the loan was for $23,250.

(1) 13.61433%
(2) 12.79841%
(3) 13.68893%
(4) 13.25002%

Answer 1

4

j12
n=17(204 months)

23,250 -281.72 0

=j12 converted to j2 = 13.250020

Question 2

A private investor expects to receive $281.72 per month for a period of 17 years as a result of a mortgage loan he has just purchased for $21,000. Calculate the investor’s expected yield (expressed as a nominal rate with semi-annual compounding) on his investment.

(1) 14.997676%
(2) 15.233374%
(3) 14.971281%
(4) 15.613513%

Answer 2

2

j12 =?
n=17(204 months)

-21,000 281.72 0

convert j12 to j2 = 15.23