Chapter 5.4, Problem 59E

	Bank Two offers a thirty-year adjustable-rate mortgage with an initial rate of $3.95\%$. This initial rate is in effect for the first six months of the loan, after which it is adjusted on a monthly basis. The monthly payment is adjusted annually. Future rates are set at $2.45$ percentage points above the 11th District Federal Home Loan Bank’s cost of funds. Currently, that cost of funds is $4.839\%$.
	a.	Find the monthly payment for the ARM's first year on a loan amount of $\$100,000$.
	b.	Find the unpaid balance at the end of the ARM’s first six months.
	c.	Find the interest portion of the seventh payment if the cost of funds does not change.
	d.	Usually, the interest portion is smaller than the monthly payment, and the difference is subtracted from the unpaid balance. However, the interest portion found in part (c) is larger than the monthly payment found in part (a), and the difference is added to the unpaid balance found in part (b). Why would this difference be added to the unpaid balance? What effect will this have on the loan?
	e.	The situation described in part (d) is called negative amortization. Why?
	f.	What is there about the structure of Bank Two's loan that allows negative amortization?