Finance
What type of loan allows the interest rate to change periodically based on a market index?
AFixed-rate mortgage
BAdjustable-rate mortgage (ARM)✓ Correct
CBalloon mortgage
DInterest-only mortgage
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that periodically adjusts based on a specified market index (such as SOFR or the 1-year Treasury). The rate and payment can go up or down.
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