1. You want to buy a car, and the bank will lend you $20,000. The loan will be fully amortized over five years. Nominal interest rate will be 6% with interest paid monthly. What will be the loan monthly payment. How much of the second month payment will be interest?
2. Elephant company common stock has a beta of 1.2. The risk-free rate is 6% and the expected market rate of return is 12%. Determine the required rate of return on the security.