Finance
An adjustable-rate mortgage (ARM) with a '5/1' structure means:
AThe rate is fixed for 5 months, then adjusts monthly
BThe rate is fixed for 5 years, then adjusts annually✓ Correct
CThe rate adjusts 5 times over the life of the loan
DThe rate changes by no more than 1% per adjustment period
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, then adjusts annually (once per year) for the remaining term of the loan. The '5' refers to the initial fixed period and the '1' refers to the adjustment frequency.
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