1. Assume the initial rate on a 1/1 ARM is 4.50%. The loan has a margin of +200 basis points above Libor subject to a 5/2/5 rate cap structure. What is the maximum rate the loan can reset to on its 1st reset date?
2. Assume the initial rate on a 1/1 ARM is 4.50%. The loan has a margin of +200 basis points above Libor subject to a 5/2/5 rate cap structure. What would the minimum rate on the index need to be if the cap were hit on the first reset?