Your ARM has a two year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.This year the market interest index increased by 2.75%.What will happen to your APR on this loan?
A)It will increase by 2%
B)It will increase by 2.75%
C)It will increase by 4%
D)It will increase by 6%

Question

Quizplus · Accepted Answer

The APR will increase by 2% due to the 2% periodic rate cap, which limits how much the interest rate can increase in a single adjustment period, despite the market interest index increasing by 2.75%.

Your ARM Has a Two Year Adjustment Interval,4% Margin,2% Periodic