Finance
A Mississippi borrower's mortgage has a teaser rate of 2.5% for the first two years before adjusting. This is an example of:
AA fixed-rate mortgage
BAn adjustable-rate mortgage (ARM) with an initial low introductory rate✓ Correct
CA balloon mortgage
DA graduated payment mortgage
Explanation
An ARM with a teaser (introductory) rate starts at a below-market rate for an initial period, then adjusts based on an index and margin. The low initial rate makes the loan appear more affordable than its long-term cost may be.
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