Finance
A loan in which the interest rate changes periodically based on a financial index is called a(n):
AFixed-rate mortgage
BBalloon loan
CAdjustable-rate mortgage (ARM)✓ Correct
DInterest-only loan
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that fluctuates over the life of the loan based on a benchmark index (e.g., SOFR). ARMs typically offer a lower initial rate but carry the risk of rising payments.
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