In the mortgage in the previous question, what is the "effective interest rate" or yield over the borrower's expected holding period if the borrower expects to hold the loan for 12 years?

Question

Quizplus · Accepted Answer

The effective interest rate or yield over the borrower's expected holding period can be calculated using the loan's terms, payments, and the expected holding period. This involves a complex calculation that takes into account the amortization of the loan over the 12 years, any fees or additional costs, and the remaining balance at the end of the period. The correct answer, 8.31%, reflects the calculated yield considering these factors, assuming the borrower pays off or refinances the remaining balance at the end of the 12 years. This calculation typically requires financial software or a financial calculator that can handle such amortization calculations.

In the Mortgage in the Previous Question, What Is the "Effective