An ARM with 2/6 interest rate caps and a 2.75 margin has a current contract rate of 9%. It's adjustment time and the index value is 4%.The next year's contract rate is:

Question

Quizplus · Accepted Answer

The new rate is calculated by adding the index value (4%) to the margin (2.75%), resulting in 6.75%. However, the rate can only increase by a maximum of 2% from the current rate of 9%, so the next year's contract rate is 7%.

An ARM with 2/6 Interest Rate Caps and a 2