-Which Loan in the Above Table Should Have the Lowest

question 16

Multiple Choice

$\begin{array}{cccc}\begin{array}{l}\\Initial ~Interest~ Rate \\Loan ~Maturity~ years) \\\% Margin ~Above~ Index \\Adjustment ~Interval \\Points \\Interest ~Rate~ Cap\\\end{array}\begin{array}{cccc}\text { LOAN 1 } & \text { LOAN 2 } & \text { LOAN 3 } & \text { LOAN 4 } \\\hline ? & ? & ? & ? \\20 & 20 & 20 & 20 \\3 \% & -- & 3 \% & 3 \% \\1 \mathrm{yr} & -- & 1 \mathrm{yr} & 1 \mathrm{yr} . \\1 \% & 1 \% & 1 \% & 1 \% \\\text { NONE } & --- & 1 \% / \mathrm{yr} . & 3 \% / \mathrm{yr} .\end{array}\end{array}$
-Which loan in the above table should have the lowest initial interest rate?

• A) Loan 1
• B) Loan 2
• C) Loan 3
• D) Loan 4

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Definitions:

Psychometric

Relating to the science of measuring mental capacities and processes.

Stereotype Threat

The risk of confirming negative stereotypes about one's social group, which can impair performance.

Negative Stereotypes

Oversimplified and generally negative assumptions about a group of people based on their membership in that group.

Cognitive Processes

Mental activities involved in acquiring, storing, retrieving, and using information, including perception, memory, language, and problem-solving.