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:

Black Bass

A common term referring to several species of North American freshwater fish in the sunfish family.

Striped Bass

A popular game fish known for its distinctive dark stripes running along its body, commonly found in both freshwater and saltwater environments.

Contrast Paragraph

A section in writing that highlights differences between two or more subjects, ideas, or objects.

Points Of Contrast

Specific features or aspects that highlight the differences between two or more things.