Finance
An Iowa adjustable-rate mortgage (ARM) has an initial rate of 4% and can adjust up to 2% per year with a 6% lifetime cap. If the initial rate is 4%, the maximum rate after two adjustments is:
A6%
B8%✓ Correct
C10%
D12%
Explanation
After first adjustment: 4% + 2% = 6%. After second adjustment: 6% + 2% = 8%. The lifetime cap of 6% above initial rate would allow a maximum of 10%, but after two adjustments the rate is 8%.
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