Question
Sharonborrows an adjustable rate loan (ARM)of $100,000 with 3 yearloanmaturity.The initial interest rate for the loanis 8.5%, the margin is 3%, the loan amortization period
Sharonborrows an adjustable rate loan (ARM)of $100,000 with 3 yearloanmaturity.The initial interest rate for the loanis 8.5%, the margin is 3%, the loan amortization period is 15 years, the frequency of adjustment is 1 year (monthly compounding), no interest rate cap or payment cap. There will be adiscount point of3% for the loan. Also,the index rates for the next 2 years are 11% and 8%, respectively. What will be the effective mortgage yield for borrowing this loan?
| A. | 12.47% |
| B. | 12.28% |
| C. | 11.98% |
| D. | 12.02% |
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International Financial Reporting A Practical Guide
Authors: Alan Melville
6th edition
1292200743, 1292200766, 9781292200767, 978-1292200743
