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Mathematics 19 Online
OpenStudy (anonymous):

can anyone help me with advanced algebra with financial applications?

OpenStudy (anonymous):

A bank advertises a 4/3 ARM at 6.35% with a 5/10 cap. What is the maximum interest rate that can be charged during the fifth year

jimthompson5910 (jim_thompson5910):

When it says "4/3 ARM" that means that for the first 4 years, the interest rate is fixed at 6.35% (that's where the "4" comes in) then the interest will increase every 3 years (so that's what the "3" stands for)

jimthompson5910 (jim_thompson5910):

So for the first four years, the interest is 6.35% after year 4, the interest will be increased by 5% (from the "5" in "5/10") so the interest rate will become 6.35% + 5% = 11.35%

jimthompson5910 (jim_thompson5910):

because year 5 is in this period, that means that 11.35% is the interest rate for year 5

OpenStudy (anonymous):

oh ok that's what I got

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