Question



LOAN 1

LOAN 2

LOAN 3

LOAN 4
Initial Interest Rate ? ? ? ?
Loan Maturity (years) 20 20 20 20
% Margin Above Index 3% --- 3% 3%
Adjustment Interval 1 yr. --- 1 yr. 1 yr.
Points 1% 1% 1% 1%
Interest Rate Cap NONE ---- 1%/yr. 3%/yr.

Which loan in the above table is a FRM?
(A) Loan 1
(B) Loan 2
(C) Loan 3
(D) Loan 4

Answer

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