-Which Loan in the Above Table Should Have the Lowest

question 16

Multiple Choice

$\begin{array}{cccc}\begin{array}{l}\\Initial ~Interest~ Rate \\Loan ~Maturity~ years) \\\% Margin ~Above~ Index \\Adjustment ~Interval \\Points \\Interest ~Rate~ Cap\\\end{array}\begin{array}{cccc}\text { LOAN 1 } & \text { LOAN 2 } & \text { LOAN 3 } & \text { LOAN 4 } \\\hline ? & ? & ? & ? \\20 & 20 & 20 & 20 \\3 \% & -- & 3 \% & 3 \% \\1 \mathrm{yr} & -- & 1 \mathrm{yr} & 1 \mathrm{yr} . \\1 \% & 1 \% & 1 \% & 1 \% \\\text { NONE } & --- & 1 \% / \mathrm{yr} . & 3 \% / \mathrm{yr} .\end{array}\end{array}$
-Which loan in the above table should have the lowest initial interest rate?

• A) Loan 1
• B) Loan 2
• C) Loan 3
• D) Loan 4

---

Definitions:

Void Contracts

Agreements that are illegal or against public policy and therefore unenforceable by law.

Bilateral Contract

A contract in which the promise of one of the parties forms the consideration for the promise of the other.

Unilateral Contract

A contract where one party makes a promise in exchange for an act by the other party.

Quasi-contract

A quasi-contract is a legal concept where the court imposes a contract-like obligation on a party to prevent unjust enrichment, even though no actual agreement exists between the parties.