Question

question 1
real estate refers to

• land and structures attached to it.
• legal benefits, interests or rights inherent in the ownership of real estate.
• movable property.
• land, but not structures attached to it.

question 2
a borrower is offered a mortgage loan for $100,000 with a fixed interest rate of 4% and a 30-year amortization period with monthly payments. what are the monthly payments?

• 525.37
• 477.41
• 660.43
• 414.47

Explanation:

Define real estate

Real estate is physical property consisting of land and any permanent structures attached to it.

Identify the correct option for Question 1

The first option, "land and structures attached to it," matches the definition of real estate.

Identify mortgage parameters

For Question 2, the given values are:

• Loan principal \(PV = 100,000\)
• Annual interest rate \(r = 4\% = 0.04\)
• Monthly interest rate \(i = \frac{0.04}{12} \approx 0.003333\)
• Total number of monthly payments \(n = 30 \times 12 = 360\)

Calculate monthly payment

Using the standard amortization formula:

$$PMT = PV \times \frac{i(1+i)^n}{(1+i)^n - 1}$$

Substitute the values:

$$PMT = 100,000 \times \frac{0.003333(1+0.003333)^{360}}{(1+0.003333)^{360} - 1}$$

$$PMT \approx 100,000 \times 0.00477415 \approx 477.415$$

Identify the correct option for Question 2

The calculated payment of approximately \(477.41\) matches the second option.

Answer:

Question 1

• land and structures attached to it. (Correct answer)
• legal benefits, interests or rights inherent in the ownership of real estate.
• movable property.
• land, but not structures attached to it.

Question 2

• 525.37
• 477.41 (Correct answer)
• 660.43
• 414.47