Loan Officer Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

To determine the interest rate charged to Marian in the second year, you need to consider both the margin and the index. The margin is a fixed percentage added to the index rate to calculate the overall interest rate for that period.

In this case, Marian's margin is 2%, and the index is 5% in the second year. To find the total interest rate, you simply add the margin to the index:

Index (5%) + Margin (2%) = Total Interest Rate (7%).

Thus, the interest rate charged to Marian in the second year would be 7%. This understanding of how margins and indexes work in determining variable interest rates is crucial for anyone studying loan origination and management.