Finance
Which of the following best describes an adjustable-rate mortgage (ARM)?
AA loan with a fixed interest rate for the entire term
BA loan whose interest rate changes periodically based on a market index✓ Correct
CA loan backed by the federal government
DA loan that requires a balloon payment in year 5
Explanation
An ARM has an interest rate that adjusts at predetermined intervals based on a benchmark index (such as SOFR), meaning monthly payments can increase or decrease.
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