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Given the Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: ΕΟΥ Index 8.6% 1 2 3 4 5 9.5% 10.5% 11.5% 10.5%

Given the Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: ΕΟΥ Index 8.6% 1 2 3 4 5 9.5% 10.5% 11.5% 10.5%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Given the following Adjustable Rate Mortgage (ARM): Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: 1 EOY Index 8.6% 9.5% 2 3 4 5 10.5% 11.5% 10.5% What are the proper interest rates for calculating the monthly payments from year 2 t lifetime cap) 10.85%, 11.75%, 12.75%; 13.75%; 12.75% 10%, 11.75%, 12.75%; 13.5%; 12.75% O None of the above is all correct O 9.75%, 11.75%, 12.75%, 13.25%, 12.75%
Transcribed Image Text:Given the following Adjustable Rate Mortgage (ARM): Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: 1 EOY Index 8.6% 9.5% 2 3 4 5 10.5% 11.5% 10.5% What are the proper interest rates for calculating the monthly payments from year 2 t lifetime cap) 10.85%, 11.75%, 12.75%; 13.75%; 12.75% 10%, 11.75%, 12.75%; 13.5%; 12.75% O None of the above is all correct O 9.75%, 11.75%, 12.75%, 13.25%, 12.75%
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