An ARM has the following characteristics at the outset: index value = 5%,margin = 2.75,teaser rate = 5.50%.The contract interest rate for the first year is:

Question

Quizplus · Accepted Answer

The contract interest rate for the first year of an ARM with a teaser rate of 5.50% is the teaser rate itself, which is 5.50%. The index value and margin are used to adjust the rate after the teaser period ends.

An ARM Has the Following Characteristics at the Outset: Index