The Following Problem Involves Adjustable-Rate Mortgage

question 29

Multiple Choice

The following problem involves adjustable-rate mortgage. You will need a table of monthly payments.
-Suppose your mortgage is $55,400 for 25 years. The index rate is 7.5% and the margin is 2.5%. Find the initial monthly payment.

• A)$503.42
• B)$513.42
• C)$415.50
• D)None of the above is correct.

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Definitions:

Marginal Tax Bracket

The rate at which the last dollar of a taxpayer's income is taxed, indicating the tax rate applied to their highest portion of income.

Corporate Bond

A debt security issued by a corporation to raise capital, promising to repay the borrowed amount plus interest at a specified future date.

Nikkei

An abbreviation for the Nikkei 225 Stock Average, a leading index of Japanese stocks.