Finance
An adjustable-rate mortgage (ARM) typically starts with a lower interest rate because:
AThe lender is required by law to offer lower initial rates
BThe borrower assumes the risk of future interest rate fluctuations✓ Correct
CThe lender reduces the rate as an incentive to new homeowners
DThe property's value is guaranteed to increase
Explanation
ARMs start with a lower initial rate because the borrower assumes the interest rate risk — the rate may increase over time based on a specified index, which shifts risk from the lender to the borrower.
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