Initial Interest Rate Loan Maturity (years) % Margin Above Index Adjustment Interval Points Interest Rate Cap LOAN 1 ? 20 3% 1 yr. 1% NONE LOAN 2 ? 20 - -- 1% LOAN 3 ? 20 3% 1 yr. 1% 1%/yr. LOAN 4 ? 20 3% 1 yr. 1% 3%/yr. With which loan in the above table does the lender have the lowest interest rate risk? O Loan 1 Loan 2 Loan 3

Initial Interest Rate Loan Maturity (years) % Margin Above Index Adjustment Interval Points Interest Rate Cap LOAN 1 ? 20 3% 1 yr. 1% NONE LOAN 2 ? 20 - -- 1% LOAN 3 ? 20 3% 1 yr. 1% 1%/yr. LOAN 4 ? 20 3% 1 yr. 1% 3%/yr. With which loan in the above table does the lender have the lowest interest rate risk? O Loan 1 Loan 2 Loan 3

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1Q

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