A bank advertises an adjustable rate mortgage with the following terms:

20 year 4/1 ARM at 3% with a 3/7 cap structure

What are the maximum interest rates for the 5^thyear and for the life of the mortgage?

(2 points)

a

5^thyear: 6%; Lifetime: 7%

b

5^thyear: 6%; Lifetime: 10%

c

5^thyear: 4%; Lifetime: 7%

d

5^thyear: 4%; Lifetime: 11%