Question: Suppose a one-year ARM loan has a margin of 2.75, an initial index of 3.00 percent, a teaser rate for the first year of 4.00

Suppose a one-year ARM loan has a margin of 2.75, an initial index of 3.00 percent, a teaser rate for the first year of 4.00 percent, and a capof 1.00 percent.If the index rate is 3.00 percent at both the beginning and the end of the first year, what will be the interest rate on the loan in year two?If there is more than one possible answer, what does the outcome depend on?

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