If an ARM Index Increased 15%,the Negative Amortization on a Loan

question 17

Multiple Choice

If an ARM index increased 15%,the negative amortization on a loan with a 5% annual payment cap is calculated by:

• A)Using the same payment as last year and deducting 5% from the principal balance
• B)Increasing the payment by 5%
• C)Totaling the difference between the payments with the 5% capped payment
• D)Compounding the difference between the payments as if no cap existed and with the 5% capped payment

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Definitions:

Signaling Molecules

Chemicals that transmit information between cells in the body, facilitating various physiological processes such as growth, inflammation, and neural communication.

Callus

Undifferentiated tissue formed on an explant (excised tissue or organ) in plant tissue culture.

Trichomes

Small hair-like outgrowths on plants that serve various functions including protection against herbivores and minimizing water loss.

Parenchyma

A type of plant tissue composed of living cells that are often spacious and used for functions such as photosynthesis, storage, and tissue repair.