You Have Taken Out a $350,000, 3/1 ARM

question 25

Multiple Choice

You have taken out a $350,000, 3/1 ARM. The initial rate of 6.0% (annual) is locked in for 3 years. Determine the owner's equity in the property after 3 years if the market value of the property at the end of year 3 is $400,000. The interest rate after the initial lock period is 6.5%. (Note: the term on this 3/1 ARM is 30 years)

• A) $13,705.75
• B) $50,000.00
• C) $63,705.75
• D) $336,294.25

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Definitions:

Type B Personality

A personality type characterized by a relaxed, patient, and easy-going nature.

General Adaptation Syndrome

A theoretical model describing the body's short-term and long-term reactions to stress, involving stages of alarm, resistance, and exhaustion.

Tend-and-befriend Response

A behavioral response to stress that involves seeking social support and nurturing others, theorized to be more common in females.

Problem-focused Coping

A strategy aimed at directly confronting or managing a problem to alleviate stress or conflict.