An ARM with 2/6 Interest Rate Caps and a 2

question 2

Multiple Choice

An ARM with 2/6 interest rate caps and a 2.50 margin has a contract rate of 5% for the first year.At the end of year one index value is 4.00%.The contract rate for year two is:

• A) 4%
• B) 6%
• C) 6.50%
• D) 7%
• E) cannot be determined

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Definitions:

Poverty

The state of having insufficient financial resources to meet basic living expenses like food, shelter, clothing, and healthcare.

Estate Systems

A socio-political system where society is divided into estates or classes, often hierarchically, each with distinct rights and duties.

Stratification

The division of society into hierarchical levels based on factors like wealth, power, and social status.

Culture Of Poverty

The argument that poverty is a way of life and, like other cultures, is passed on from generation to generation.