Problem H2- What is the lender's yicld on the following 1-year adiustable rate mortgage? What is the lender's expected yield (assume a holding period of term) for the following loan if 1Y ear Treasury yields are expected to be 5% today, 8%12 months from now, and 4% thereafter? ARM description - Rate resets every year. Fully adjusted rate = Index +2%. Index =1Y ear Treasury yield at reset date. Lifetime Cap of 9% - the mortgage interest rate can never go above 9%... Period change cap of 2 percentage points (200bps) - the mortgage interest rate cannot change more than 200 bps at the reset date. No other caps, floors, or max adjustments. Teaser rate of 5% 30-year loan with no points or fces. Loan amount $400,000 Problem H2- What is the lender's yicld on the following 1-year adiustable rate mortgage? What is the lender's expected yield (assume a holding period of term) for the following loan if 1Y ear Treasury yields are expected to be 5% today, 8%12 months from now, and 4% thereafter? ARM description - Rate resets every year. Fully adjusted rate = Index +2%. Index =1Y ear Treasury yield at reset date. Lifetime Cap of 9% - the mortgage interest rate can never go above 9%... Period change cap of 2 percentage points (200bps) - the mortgage interest rate cannot change more than 200 bps at the reset date. No other caps, floors, or max adjustments. Teaser rate of 5% 30-year loan with no points or fces. Loan amount $400,000