The Main Problem with an Adjustable Rate Mortgage (ARM)is That

question 85

Multiple Choice

The main problem with an adjustable rate mortgage (ARM) is that:

• A)you have to pay the same interest rate as in a fixed-rate mortgage plus 10 percent.
• B)it makes planning and budgeting difficult because you don't know when the rate will change.
• C)when the rate adjusts upward your house payment goes down.
• D)when the prime rate falls,so does your mortgage interest rate.

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Definitions:

Island Arc

Curved chains of volcanic islands located at convergent tectonic plate boundaries, often formed from the subduction of an oceanic plate under another oceanic plate.

Mid-ocean Ridge

An underwater mountain range, formed by plate tectonics, that marks the site of upwelling magma creating new oceanic crust.

Caldera-forming Eruptions

Volcanic eruptions that create large, basin-shaped depressions called calderas, formed by the collapse of a volcano into emptied magma chambers.

Ash Layers

Stratified deposits resulting from the settling of volcanic ash ejected during volcanic eruptions, which can cover large areas and form distinctive markers in the geological record.