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You observe the following for the Treasury yield curve: 3.00% for the 1-year, 4.25% for the 2-year, and 5.50% for the 3-year. Your wish to
You observe the following for the Treasury yield curve: 3.00% for the 1-year, 4.25% for the 2-year, and 5.50% for the 3-year. Your wish to get an ARM with monthly payments with a present value of $100,000 that fully amortizes over thirty years. The ARM rate resets each year, and each year the ARM rate is equal to the 1-year Treasury at the time plus a margin of 2.00%. What is your monthly payment in the third year, i.e. starting in month 25?
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