Finance
A Kentucky buyer's adjustable-rate mortgage has a 2/6 cap structure. If the initial rate is 5%, the maximum rate over the life of the loan is:
A7%
B11%✓ Correct
C9%
D13%
Explanation
A 2/6 cap means the rate can increase 2% per adjustment period and 6% over the life of the loan. Starting at 5%, the lifetime cap is 5% + 6% = 11%.
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