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Malcolm Has a Down Payment of $45 000 on a House

question 86

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Malcolm has a down payment of $45 000 on a house valued at $200 000.He might be better off to borrow an additional $5000 on a personal loan to avoid the high ratio insurance premium.


Definitions:

Forward Rate

The agreed-upon price for a transaction that will occur at a future date, as in a forward contract.

Zero-Coupon Bond

A bond that is sold at a discount and pays no interest, but is redeemed at its face value at maturity, generating a profit for the holder.

Yield

The income return on an investment, such as the interest or dividends received, usually expressed as an annual percentage of the investment's cost.

Zero-Coupon Bond

A bond that is sold at a discount and does not pay interest but is redeemed at its full face value at maturity.

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