Can someone please clarify for me what the APR would be per the new rules as stated in 1026.32 a(3)(ii).

Ex: Loan is closed-end ARM, 15 year maturity.
Initial rate is WS + 1% w/ 2/6 caps.

What would the rate be? 10.25%?

I know I'm using the terms rate and APR interchangably, but so is the reg. I'm really confused!