Finance
An adjustable-rate mortgage (ARM) typically features:
AA fixed interest rate for the entire loan term
BAn interest rate that adjusts periodically based on a market index plus a margin✓ Correct
CMonthly payments that never change
DA rate set exclusively by the Federal Reserve
Explanation
An ARM has an interest rate that adjusts periodically (e.g., annually) based on a benchmark index (such as the SOFR or Treasury index) plus a fixed margin. Initial rates are often lower than fixed-rate mortgages but can rise over time.
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