Real Estate Principles 3rd Edition by David Ling,Wayne Archer

Exercise 5

Suppose a one-year ARM loan has a margin of 2.75 percent, a teaser rate for the first year of 4.00 percent, and a cap of 1.00 percent. If the index rate is 3.00 percent at the end of the first year, what will be the interest rate on the loan in year 2 If there is more than one possible answer, what does the outcome depend on