Econ 156, Foldvary

Real Estate Economics

Problem set 2

20 points each.

Due Friday, May 30, on paper.

1. What have you learned in econ 156 about the risks associated with owning real estate?

2. What have you learned in econ 156 about annuities and their relationship to real estate?

3. Do problem #10 on p. 409.

4. Do problem #12 on p. 409.

5. What have you learned in econ 156 about amortizing loans?

6. What have you learned in econ 156 about adjustable-rate mortgages?

7. Suppose you have a $200,000 mortgage on your own howme, and you inherit $200,000, which you want to financially invest for retirement 40 years from now. Analyze whether you should pay off the mortgage or not.