Finance
An adjustable-rate mortgage (ARM) is characterized by:
AA fixed interest rate for the entire loan term
BAn interest rate that changes periodically based on a market index✓ Correct
CBalloon payments at the end of the loan
DInterest-only payments for the first 10 years
Explanation
An ARM has an interest rate that adjusts periodically (after an initial fixed period) based on a financial index such as SOFR or the Treasury index, plus a margin. This causes the monthly payment to fluctuate.
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