LOAN 2 ? LOAN 1 ? 20 3% LOAN 3 ? 20 3% LOAN 4 ? 20 3% 20 Initial Interest Rate Loan Maturity (years) % Margin Above Index Adjustment Interval Points Interest Rate Cap 1 yr. 1 yr. 1 yr. 1% 1% NONE 1% 1%/yr. 1% 3%/yr. With which loan in the above table does the lender have the lowest interest rate risk? Multiple Choice Loan 1 2 Prev Next A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? Multiple Choice 14,34% 12.01% 13.509