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Q-48.1 If the monthly payment on a 15-year fully-amortizing mortgage loan, with $100,000 principal, is $740, what is the loan’s yield (YTM)? | Financial Risk Manager Part 1 Quiz - LeetQuiz

Explanation:

Use the level-payment mortgage formula:

PMT = PV \cdot \frac{r}{1-(1+r)^{-n}}

where:

$PV = 100{,}000$
$PMT = 740$
$n = 15 \times 12 = 180$
$r$ is the monthly yield.

Solving for $r$ gives a monthly rate of about 0.333%, which annualizes to about 4.0% nominally compounded monthly.

So the closest answer is A. 4.0%.

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