1. A borrower takes out a $400,000 30-year fully amortizing 1-year LIBOR based ARM loan with a 2.5% margin and monthly payments. The loan has a “teaser” rate of 1% for the first year, after which the rate resets annually with 2% annual and 5% lifetime interest rate increase caps. On the first reset date, 1-year LIBOR is 1.5%. What would be the monthly payment in the second loan year?

A. 1888

B. 1722

C. 1673

D. 1287

2. Swap execution facilities

(a) have the majority of interest rate derivatives trading;

(b) have been banned under Dodd-Frank;

(c) require voice transactions;

(d) have consolidated into only two platforms;