Chapter 9: Questions and Applications 2, 13, 14, and 16; Problem 1
2.Mortgage Rates and Risk What is the general relationship
between mortgage rates and long-term government security rates? Explain how
mortgage lenders can be affected by interest rate movements. Also explain how
they can insulate against interest rate movements.
13. Secondary Market Compare the secondary market activity
for mortgages to the activity for other capital market instruments (such as
stocks and bonds). Provide a general explanation for the difference in the
14. Financing Mortgages What types of financial institution
finance residential mortgages? What type of financial institution finances the
majority of commercial mortgages?
16. Mortgage-Backed Securities Describe how mortgage-backed
securities (MBS) are used.
1. Amortization Use an amortization table (such as www
.bloomberg.com/invest/calculators/index.html) that deter- mines the monthly
mortgage payment based on a specific interest rate and principal with a 15-year
maturity and then for a 30-year maturity. Is the monthly payment for the
15-year maturity twice the amount for the 30-year maturity or less than twice
the amount? Explain
Chapter 10: Questions and Applications 1, 5, 15, and 17;
1. Shareholder Rights Explain the
rights of common stockholders that are not available to other individuals.
5. Prospectus and Road Show Explain the use of a prospectus
developed before an IPO. Why does a firm do a road show before its IPO? What
factors influence the offer price of stock at the time of the IPO?
15. NYSE Explain why stocks traded on the New York Stock
Exchange generally exhibit less risk than stocks that are traded on other
17. Role of IMFs How have international mutual funds (IMFs)
increased the international integration of capital markets among countries?
1. Dividend Yield Over the last year, Calzone Corporation
paid a quarterly dividend of $0.10 in each of the four quarters. The current
stock price of Calzone Corporation is $39.78. What is the dividend yield for