Suppose you are shopping for a mortage and the lender presents you with long menu on loan options. For each option, there is a discount point charged at an interest rate given. The amount of the point...

Suppose you are shopping for a mortage and the lender presents you with long menu on loan options. For each option, there is a discount point charged at an interest rate given. The amount of the point ranges anywhere from -2% to 3%. When would it be optimal for you select a loan with a discount point of 3%?

Group of answer choices

1) Only when the point is equal to the effective borrowing cost

2) Never

3) Only with ARM

4) If you have a very short holding period

5) If you have a very long holding period