With an ARM, Who Must Take on the Interest Rate

question 26

Multiple Choice

With an ARM, who must take on the interest rate risk?

• A) borrower
• B) lender
• C) both
• D) neither

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Definitions:

Equities

Financial securities representing ownership interest in a company, typically in the form of shares of stock.

Monetary Unit Assumption

An accounting principle that assumes transactions can be recorded in a stable currency that is the most relevant to the company.

Unit Of Measure

A standard quantity used to express an amount of a physical property, financial item, or activity, facilitating comparisons and calculations.

Economic Entity Assumption

An accounting principle that separates the transactions of a business from those of its owners or other businesses.