Do not write on the question paper Time: 1 hour Question One a) Explain five property interests that can be mortgaged (5 marks) b) An ARM is made for Kshs 150,000 for 30 years with the following terms: Initial interest rate is 7%; Index is 1-year Treasuries; Payments reset cach year; Margin is 2%; Payment cap at 5% increase in any year. Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Year 2 is 7%; Year 3 is 8.5%; Year 4 is 9.5%; Year 5 is 11%. Payments are monthly. Required Compute the payments and loan balances for the five-year period. (15 marks)