1. You are considering an ARM with the following characteristics: Mortgage amount-$200,000 Margin = 2.50 Term-30 years Monthly Payments Initial Teaser Rate = 3.50% All subsequent adjustments 2/6 Interest rate caps Index = 1 year TB yield One-year adjustable Discount points = 2.00 Prepayment penalty-4% for the first three years are made from the Teaser Rate A. (1 pt) If the TB yield is 3.75% at the outset, what is the monthly payment for year one? Answer (1 pt) If the TB yield goes from 3.75% to 4.75% at the end of year one, what is the monthly payment for year two! B. Answer C. (1 pt) If the loan is repaid at the end of year two, what is the effective cost? Answer D. (1 pt) Suppose that, at the end of year two, the index is 5.00% and stays constant for the remaining life of the loan. What is the APR on the loan? Answer 1. You are considering an ARM with the following characteristics: Mortgage amount-$200,000 Margin = 2.50 Term-30 years Monthly Payments Initial Teaser Rate = 3.50% All subsequent adjustments 2/6 Interest rate caps Index = 1 year TB yield One-year adjustable Discount points = 2.00 Prepayment penalty-4% for the first three years are made from the Teaser Rate A. (1 pt) If the TB yield is 3.75% at the outset, what is the monthly payment for year one? Answer (1 pt) If the TB yield goes from 3.75% to 4.75% at the end of year one, what is the monthly payment for year two! B. Answer C. (1 pt) If the loan is repaid at the end of year two, what is the effective cost? Answer D. (1 pt) Suppose that, at the end of year two, the index is 5.00% and stays constant for the remaining life of the loan. What is the APR on the loan