Finance
An adjustable-rate mortgage (ARM) differs from a fixed-rate mortgage in that:
AThe principal amount adjusts over time
BThe interest rate can change periodically based on a benchmark index✓ Correct
CThe monthly payment remains constant throughout
DThe loan term is always shorter than a fixed-rate loan
Explanation
An ARM has an interest rate that adjusts periodically based on a market index (such as SOFR or the 1-year Treasury). Monthly payments can increase or decrease when the rate adjusts.
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