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  3. 11.a 30 year 1/1 arm has an initial rate of 1.5%.

11.A 30 year 1/1 ARM has an initial rate of 1.5%. In the future the...

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11.A 30 year 1/1 ARM has an initial rate of 1.5%. In the future the rate will reset to 225 basis points above the LIBOR index with no rate caps or floors. In 1 year, at the time of the first reset, the LIBOR is 6.75%. What interest rate will be used to compute payments at the first reset? A) 2.25 3.75 C) 6.75 9.00 12.A 30 year 1/1 ARM has an initial rate of 8.5%. In the future the rate will reset to 350 basis points above the LIBOR index subject to a 2/3/4 rate cap structure. What is the maximum interest rate the borrower can be charged at the time of the first reset? A) B) C) D) 3.50 10.50 12.00 12.50

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