Question 31 / 31: 

Earn up to 5% extra credit. It can help you but not hurt you. And this time, no

diversification. You must pick only one of the questions below to answer. If the TA cannot tell which one you wanted, he

will simply grade the first. (Aside: Do you get how valuable diversification is if you are risk-averse?)

the market yield is 7.5% (BEY), how many disbursement discount points must the lender charge to avoid doing a negative

NPV deal from a market value perspective?

(5 points) Consider a $4,000,000, 7%, 25-year mortgage with monthly payments and a 7-year maturity with balloon. If
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Real Estate Finance & Investment Midterm Exam 2003

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Attribution:  Geltner, David, and Tod McGrath. 11.431J Real Estate Finance and Investment, Fall 2006. (MIT OpenCourseWare: Massachusetts Institute of Technology), http://ocw.mit.edu/courses/urban-studies-and-planning/11-431j-real-estate-finance-and-investment-fall-2006 (Accessed 1 May, 2014). License: Creative Commons BY-NC-SA
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