1. Interest rates for commercial mortgages are rising during this point in the economic cycle. You have a variable rate mortgage that is secured by the warehouse that you own near a busy international airport. The variable interest rate on the mortgage floats at 300 basis points over the 30-day SOFR and adjusts monthly. What is your new interest rate if it adjusted on the day you complete this quiz?
2. If your bank offered you a fixed-rate mortgage at 5% for five years would you take the offer? Would this be an example of an operating, investing or financing activity? Why would you take or refuse the offer to refinance at the fixed rate based upon what you believe will happen in the economic cycle over the next five years?