Choose the Word or Phrase in [ ] Which Will

question 154

Short Answer

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-The interest rate on an ARM can be increased [automatically every year | only when a designated index increases].

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Definitions:

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, investors, and economists.

Cost of Capital

The Cost of Capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view, the required rate of return on a portfolio company's existing securities.

Specific Financing

Financing that is intended for a particular purpose or project, with clear specifications and usually backed by specific collateral.

After-Tax Cost

The expense of any financial obligation or investment after accounting for the effects of taxes.