Finance
A South Carolina lender offers a 5/1 ARM. What does this mean?
AThe rate is fixed for 5 months, then adjusts every year
BThe rate is fixed for 5 years, then adjusts annually✓ Correct
CThe rate adjusts 5 times over the life of the loan
DThe loan has a maximum of 5 rate adjustments per year
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, after which the rate adjusts every 1 year based on a market index plus a margin.
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