$1.$ You are seeking a $(30-$year$)$ ARM loan of $$225,000$ which will charge $2\mathrm{.}5$ points. You will

also incur $$1400$ in other third party closing costs related to this loan. Assuming you keep this

loan for $4$ years, what are your CF$$s$,$ the yield to lender and cost to borrower $($expressed as

APR$$s$)?$ What do you pay each year in interest?

$$ Initial rate $2\mathrm{.}75\%$

$$ Annual adjustments $$ Tbill $+2\mathrm{.}0\%($rounded to $1/8\%)$

$$ No payment or interest rate caps

$$ Tbill Index, now at $1\mathrm{.}93,$ then changes annually to: $3\mathrm{.}73,5\mathrm{.}62,7\mathrm{.}26$

Is this loan teased? Explain.