Finance
A Massachusetts adjustable-rate mortgage (ARM) adjusts its interest rate based on:
AThe lender's prime lending rate only
BAn index plus a margin, subject to caps on rate changes✓ Correct
CThe Massachusetts Division of Banks base rate
DThe borrower's credit score at renewal
Explanation
ARM interest rates are calculated as an index (such as SOFR or the 1-year Treasury) plus a margin (the lender's profit). Rate adjustment caps (periodic and lifetime) limit how much the rate can change at each adjustment and over the life of the loan.
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