Suppose that you have just borrowed $225,000 using an adjustable-rate mortgage. Suppose that the payment is scheduled to adjust at the end of every year. Use the information provided below to calculate the year 2 payment for this loan. Index rate: 1-year CMT (Currently 1.01% and will increase to 2.06% at the end of the 1st year)
Margin: 275 basis points
Periodic Cap: 2 percentage points
Lifetime Cap: 5 percentage points
Amortization: 30 years with monthly payments and compounding
a. $1,107
b. $1,160
c. $1,296
d. $1,178

Recently, verizon wireless ran a pricing trial in order to estimate the elasticity of demand for its services. the manager selected three states that were representative of its entire service area and increased prices by 5 percent to customers in those areas. one week later, the number of customers enrolled in verizon's cellular plans declined 4 percent in those states, while enrollments in states where prices were not increased remained flat. the manager used this information to estimate the own-price elasticity of demand and, based on her findings, immediately increased prices in all market areas by 5 percent in an attempt to boost the company's 2016 annual revenues. one year later, the manager was perplexed because verizon's 2016 annual revenues were 10 percent lower than those in 2015"the price increase apparently led to a reduction in the company's revenues. did the manager make an error? yes - the one-week measures show demand is inelastic, so a price increase will decrease revenues. yes - the one-week measures show demand is elastic, so a price increase will reduce revenues. yes - cell phone elasticity is likely much larger in the long-run than the short-run. no - the cell phone market must have changed between 2011 and 2012 for this price increase to lower revenues.

The market yield on spice grills' bonds is 15%, and the firm's marginal tax rate is 33%. what is their shareholders' required return if the equity risk premium is 4%?

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