Finance
An 'interest rate cap' in a Louisiana ARM protects the borrower by:
ASetting a minimum interest rate the lender must charge
BLimiting how much the interest rate can increase per adjustment period and/or over the life of the loan✓ Correct
CGuaranteeing the rate will never change
DSetting the rate equal to the prime rate plus 1%
Explanation
Interest rate caps on ARMs protect borrowers by limiting rate increases — periodic caps limit changes per adjustment, lifetime caps limit total change over the loan's life. This provides some payment stability in rising rate environments.
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