Finance
In an ARM loan, the index is:
AA fixed percentage set by the lender
BA benchmark interest rate (e.g., SOFR) used to determine the loan's interest rate adjustments✓ Correct
CThe initial interest rate for the first year
DThe maximum interest rate allowed
Explanation
In an ARM, the index is a published benchmark interest rate (such as SOFR or Treasury rates) to which the lender adds a margin to determine the current interest rate.
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