Explain the underlying principle for a yield maintenance charge
What will be an ideal response?
The underlying principle for a yield maintenance charge is to prevent lenders from refinancing when it would otherwise be to their advantage. The yield maintenance charge, also called the make whole charge, makes it uneconomical to refinance solely to get a lower mortgage rate.
The simplest and most restrictive form of yield maintenance charge ("Treasury flat yield maintenance") penalizes the borrower based on the difference between the mortgage coupon and the prevailing Treasury rate.
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Some of the cash flows shown on a time line can be in the form of annuity payments but none can be uneven amounts.
Answer the following statement true (T) or false (F)
Use the information in Table 4.1. The company works 250 days per year and operates two shifts, each covering 8 hours
If a 15 percent capacity cushion is maintained, how many hours of capacity can the company expect from each of its Mark I machines? A) fewer than 3000 B) between 3000 and 3500 C) between 3501 and 4000 D) more than 4000
The ________ is the compound annual rate of return that a firm will earn if it invests in the project and receives the given cash inflows
A) risk-free rate B) internal rate of return C) opportunity cost D) cost of capital
In which of the following cases is the Cell Value equal to the right-hand side of the value of the constraint?
A) quantity of no-swivel produced B) quantity of swivel produced C) fabrication hours used D) finishing hours used