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Which of the following 4 loans has the lowest interest rate risk to the lenders? Loan 1 Loan 2 Loan 3 Loan 4 Initial Interest

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Which of the following 4 loans has the lowest interest rate risk to the lenders? Loan 1 Loan 2 Loan 3 Loan 4 Initial Interest rate 5.00% 3.75% 4.50% 4.00% Loan Maturity (in years) 30 30 30 30 Margin above the index n/a 3% 3% 3% Adjustment interval n/a every year every year every year 1% per 3% per Interest rate cap n/a None year year Loan 1 Loan 2 Loan 3 Loan 4 Cannot determine

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