1. Explain how the equity in a firm that uses debt is like a call option.
2. Rank the following from highest monthly payment to lowest
• 5% rate, 30-year term, 30-year amortization
• 4% rate, 5-year term, 30-year amortization
• 4% rate, 15-year term, 15-year amortization
• 5% rate, 5-year term, 15-year amortization