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Assume you have a 2/1 Adjustable Rate Mortgage. If the margin/spread is 2.0 percentage points over the 1 Year T-Bill Rate and has (i)
Assume you have a 2/1 Adjustable Rate Mortgage. If the margin/spread is 2.0 percentage points over the 1 Year T-Bill Rate and has (i) an initial cap of a 1.5 percentage point change at the time of the first adjustment, (ii) an annual cap of a 1.0 percentage point adjustments thereafter, (iii) a maximum interest rate of 8.25% and (iv) a minimum interest rate of 3.5%, calculate your interest rate at the time of each adjustment using the following information (10 points): (a) Initial Interest Rate: making of the loan. = (b) Year 2 Interest Rate of the first anniversary date. (c) Year 3 Interest Rate of the second anniversary date. (d) Year 4 Interest Rate = the third anniversary date. = (e) Year 5 Interest Rate of the fourth anniversary date. = (f) Year 6 Interest Rate = the fifth anniversary date. (g) Year 7 Interest Rate of the sixth anniversary date. (h) Year 8 Interest Rate = of the seventh anniversary date. (i) Year 9 Interest Rate = the eighth anniversary date. (j) Year 10 Interest Rate = the ninth anniversary date. = % if the 1 Year T-Bill Rate is equal to 2.0% at the % if the 1 Year T-Bill rate is equal to 1.5% at the time % if the 1 Year T-Bill rate is equal to 1.25% at the time % if the 1 Year T-Bill rate is equal to 3% at the time of % if the 1 Year T-Bill rate is equal to 3.25% at the time % if the 1 Year T-Bill rate is equal to 4.5% at the time of % if the 1 Year T-Bill rate is equal to 5.25% at the time % if the 1 Year T-Bill rate is equal to 6.5% at the time % if the 1 Year T-Bill rate is equal to 6.5% at the time of % if the 1 Year T-Bill rate is equal to 5% at the time of
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