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Resolve all four parts of the last problem assuming that the loan has a 20 percent payment cap instead of 2/6 interest rate caps.

A) what is the initial payment on this mortgage?

B) If the 1-year security is yielding 2.25 percent at the first adjustment date, what is your payment on this loan during the second year?

C) Suppose that the 1-year Treasury is yielding 2.75 percent at the second adjustment date. What is the new payment on this loan during the third year?

D) Assuming that you pay of the loan at the end of the third year, what yield did the lender earn on this loan?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92875299

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