In Comparing an Adjustable Rate Mortgage ARM) with a Fixed

question 28

Multiple Choice

In comparing an adjustable rate mortgage ARM) with a fixed rate mortgage FRM) :

• A) Both the borrower and lender bear more interest rate risk with the ARM than with the FRM.
• B) Both the borrower and the lender bear less interest rate risk with the ARM than with the FRM.
• C) The ARM borrower bears more interest rate risk, but the ARM lender bears less interest rate risk, than with the FRM.
• D) The ARM borrower bears less interest rate risk, but the ARM lender bears more interest rate risk, than with the FRM.

---

Definitions:

Subcontracting Cost

Expenses incurred when a company contracts out work to external suppliers or vendors.

Seasonal Demand

Relates to fluctuations in consumer demand for certain products or services that occur at regular intervals due to seasonality, such as holidays or weather changes.

Stockout

a situation where inventory items are not available in stock when demanded by a customer, leading to potential sales loss and customer dissatisfaction.

Supply Chain

A network of all entities involved in creating and distributing a product, from raw material sourcing to production, and delivery to the end user.