Finance
A mortgage that has a fixed rate for an initial period and then adjusts periodically based on an index is called a(n):
ABalloon mortgage
BFixed-rate mortgage
CAdjustable-rate mortgage (ARM)✓ Correct
DGraduated payment mortgage
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that is fixed for an initial period (commonly 3, 5, 7, or 10 years) and then adjusts periodically based on a market index. ARMs often start with lower rates than fixed-rate mortgages but carry rate risk.
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