Consider a $

$2$

$2$

$5$

$,$

$0$

$0$

$0$

$5$

$-$

$1$

$$ARM amortized over

$3$

$0$

$$years with monthly payments. The

loan is indexed to the

$1$

$-$

year constant maturity Treasury security with a

$3$

$$percent

margin and

$2$

$-$

$6$

$$caps

$($

$2$

$$percent annually and

$6$

$$percent lifetime. The initial interest

rate on this loan is

$4$

$.$

$5$

$$percent$.$

a

$)$

$$What is the initial monthly payment on this loan?

b

$)$

$$How much will the borrower still owe on this loan at the first adjustment date

$($

the

end of the

$5$

th year

$)$

$?$

c

$)$

$$Suppose that the yield on the

$1$

$-$

year T

$-$

Bill is

$3$

$.$

$5$

$$percent at the first adjustment

date. What will the next payment be on the loan after it adjusts?

d

$)$

$$If the yield on the

$1$

$-$

year T

$-$

Bill is

$2$

$.$

$7$

$5$

$\%$

$$at the next adjustment date, what will be

the new payment on the loan at that time?

e

$)$

$$Suppose that the borrower must pay two points in conjunction with this loan and

expects to hold it for seven years. What is the loan

$$

s effective borrowing cost

$($

EBC

$)$

$?$

pls show what u put in the calculator