1. Regarding the term structure of interest rates; the unbiased expectations theory (UET), and the liquidity premium theory (LPT). Which do you find more plausible and why?
2. You borrow $210,000 to purchase a home. The terms of the loan call for monthly payments over 30 years at a mortgage rate of 4.50 percent. What percentage of your first 60 months' total payments go toward interest?
3. Phil can afford $240 a month for five years for a car loan. If the interest rate is 5.5 percent, how much can he afford to borrow to purchase a car?