Finance
In New Mexico, which of the following best describes 'interest rate risk' in mortgage lending?
AThe risk that a borrower will default
BThe risk that rising interest rates will reduce the value of existing fixed-rate mortgages in the secondary market✓ Correct
CThe risk that property values will decline
DThe risk of fraud in mortgage applications
Explanation
Interest rate risk is the risk that changes in market interest rates will affect the value of existing loans. Rising rates reduce the value of older, lower-rate loans—a key concern for mortgage investors in the secondary market.
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