An ARM is made for $ 1 5 0 , 0 0 0 for 3 0 years
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Question:
An ARM is made for $ for years with the following terms:
Initial interest rate percent
Index year Treasuries
Payments reset each year
Margin percent
Interest rate cap None
Payment cap percent increase in any year
Discount points percent
Fully amortizing; however, negative amortization allowed if payment cap reached
Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year BOY percent; BOY percent; BOY
percent; BOY percent.
Compute the payments, loan balances, and yield for the ARM for the fiveyear period.
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