Finance
An adjustable-rate mortgage (ARM) with a 2/2/5 cap structure means:
AThe rate adjusts every 2 years with a 5% total cap
BThe initial adjustment is capped at 2%, periodic adjustments at 2%, lifetime cap at 5%✓ Correct
CThe loan has a 2-year fixed period, 2-year adjustment period, 5-year term
DThe rate can increase 5% in the first two adjustments
Explanation
A 2/2/5 ARM cap means: the first adjustment is capped at 2% above the start rate, each subsequent adjustment is capped at 2%, and the lifetime cap limits the rate to 5% above the initial rate.
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