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The fully-indexed rate on a 5/1 ARM with a maturity of 30 years is determined by the yield on the one-year LIBOR plus a margin
The fully-indexed rate on a 5/1 ARM with a maturity of 30 years is determined by the yield on the one-year LIBOR plus a margin of 250 basis points. If the fully-indexed (composite) rate is currently 6%, what is the current yield on the one-year LIBOR (in percent)?
If there is a 1% annual interest rate adjustment cap over the initial composite rate in this mortgage, what are the scheduled payments in the sixth year of the loan if the yield on the one-year LIBOR is 5% at the first reset date?
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