Smith is arranging a mortgage loan of 100,000 is to be repaid with monthly payments...
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Smith is arranging a mortgage loan of 100,000 is to be repaid with monthly payments over 25 years, with the first payment due one month after the loan is made. Interest is quoted at a nominal annual rate compounded semiannually of i^(2). The loan will not be issued for several months, and the interest rate will be set at the time of the loan. Smith, in determining the sensitivity of his monthly payment to the interest rate calculates d/di^(2) x K, where K is the monthly payment. Find the value of this derivative for the following values of i^(2): 21%, 13%, 10%, 5%.
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