Finance
Which type of mortgage adjusts the interest rate periodically based on a specified index?
AFixed-rate mortgage
BAdjustable-rate mortgage (ARM)✓ Correct
CBalloon mortgage
DReverse mortgage
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that can change periodically based on a benchmark index (such as SOFR or the 1-year Treasury). The rate changes cause the monthly payment to adjust up or down.
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