4) Assume a 2/1 ARM without cap. Term=30 years. Initial loan balance=$200,000. The teaser rate=7%, margin=2%. What is the mortgage balance at the end of Year 2?

Year	LIBOR	Mortgage rate	Beginning balance	mortgage payment	Interest payment	Principal payment	Ending balance
1	8.60%
2	9.50%
3	10%

Select one:

a. $199,732.43

b. $195,790.03

c. $201,187.56

d. $175,098.34