Question

Please answer these three question

3. Assume a home buyer puts 20% down on a $200,000 house and uses a mortgage to borrow the rest. What will the amount of the mortgage be (excluding any closing costs)? $180,000 $160,000 $240,000 $200,000

4. Variable rate loans typically have a 1)_______ interest rate than fixed rate loans because with variable rate loans, the borrower assumes the risk that the interest rate might 2)________. Lower, Increase Higher, Increase Higher, Decrease Lower, Decrease

5. Assume that Jocelyn is comparing two fixed-rate loan options, a 15 year and a 30 year mortgage. Both options have the same interest rate and amount borrowed. The 30 year, when compared to the 15 year loan will have a 1)_____________ monthly payment and a 2)___________ total cost when repayment is completed. Higher, Higher Lower, Higher Higher, Lower Lower, Lower

6. Megan has $500 in short-term savings, $5,000 in her retirement savings account, $500 in credit card debt, and student loan debt of $6,500. Assuming that these are all of Megan's assets and liabilities, what is Megan's net worth? Negative $3,500 Positive $4,000 Positive $5,500 Negative $1,500 $0

Answer 1

QUESTION 3.

20% of $ 200000 =

20/100 × 200000 = 40000

The rest borrowed using a mortgage =
200000 - 40000 = $ 160000

QUESTION 4.

Variable loans have varying interest rates since the borrower assumes the risk that the interest rate might decrease.

QUESTION 5

The 30 year mortgage compared to the 15 year mortgage, will have a lower monthly payment but a higher total cost at the end of the term. The longer the term, the higher the total amount of interest.

QUESTION 6

Megan's assets (what he has) = $500 + $5000 = $5500

Megan's liabilities (what he needs to pay out) = $500 + $6500 = $7000

Net worth = total assets - total liabilities

5500 - 7000 = - 1500

Negative $ 1500