In reading the national business news, you hear that mortgage rates increased by 50 basis points. If mortgage rates were initially at 6.5%, what are they after this increase?
A) 6.55%
B) 7.0%
C) 11.5%
D) 56.5%

Question

Quizplus · Accepted Answer

To calculate the new mortgage rate after an increase of 50 basis points (0.50%), we need to add 0.50% to the initial rate of 6.5%.

0.50% of 6.5% = 0.005 x 6.5 = 0.0325

So, the new mortgage rate is:

6.5% + 0.0325 = 6.5325%

Which rounded to the nearest tenth is 7.0%. Therefore, the correct answer is B, 7.0%.

In Reading the National Business News, You Hear That Mortgage