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Determine the appropriate contract rates for years 2, 3, and 4 on an ARM that requires annual adjustments, and has a 2% periodic cap and
Determine the appropriate contract rates for years 2, 3, and 4 on an ARM that requires annual adjustments, and has a 2% periodic cap and a 6% lifetime cap. The ARM does not include a teaser rate in the first year. Year Index Contract rate 1 2.50% 5.00% 2 4.50% ? 3 6.75% ? 4 8.75% ? 7.00%, 9.00%, 11.00% 7.00%, 9.25%, 11.25% 7.25%, 9.25%, 11.25% 7.25%, 9.00%, 11.25% 7.00%, 9.25%, 11.00%
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