Your Mortgage Is an ARM with a 1 Year Adjustment

question 39

Multiple Choice

Your mortgage is an ARM with a 1 year adjustment interval,4% margin,and a 2% periodic cap.Your initial APR on this loan was 4.5%.Over the last 5 years the market rates of interest have risen dramatically.The current interest rate index for your loan is 8.5 %.What APR are your monthly payments being calculated on today?

• A)4.5%
• B)8.5%
• C)10.5%
• D)12.5%

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Definitions:

Loan

is a sum of money borrowed that is expected to be paid back with interest.

Receivables

Money owed to a business by its customers for goods or services that have been delivered or sold but not yet paid for.

Unsecured

Refers to a loan or credit that is not backed by collateral, meaning the lender takes on more risk and relies on the borrower's creditworthiness.

Internal Audits

Evaluations conducted by a company's own staff to assess its systems, controls, and operations for efficiency, effectiveness, and compliance.