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Determine the appropriate contract interest rate for years 2 and 3 on a 1/1'ARM with a one percentage point annual interest rate cap and a

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Determine the appropriate contract interest rate for years 2 and 3 on a "1/1'ARM with a one percentage point annual interest rate cap and a margin of 2.75%. The contract rate in year one is set at 3.50%. The index rate is currently 1.75%. The expected index rate at the beginning of year 2 is 2.00%. The expected index rate at the beginning of year 2 is 3.00%. The contract rate at the beginning of year 2 will be The contract rate at the beginning of year 3 will be 4.75%, 5.75% None of the selections is correct 0 4.50%, 5.50% ho 4.75%, 5.50% 4.50%, 5.75%

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