Question: Consider a 15-year $300,000 5/1 ARM having a 3% margin and based on the CMT index. Suppose that the interest rate is initially 6.3% and

Consider a 15-year $300,000 5/1 ARM having a 3% margin and based on the CMT index. Suppose that the interest rate is initially 6.3% and the value of the CMT index is 3% 5 years later. Assume that all interest rates use monthly compounding.
(a) Calculate the monthly payment for the first 5 years.
(b) Calculate the unpaid balance at the end of the first 5 years.
(c) Calculate the monthly payment for the sixth year?

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