How Does the Use of Adjustable-Rate Mortgages Affect Interest-Rate Risk

question 36

Multiple Choice

How does the use of adjustable-rate mortgages affect interest-rate risk?

• A) It reduces the interest-rate risk of lenders.
• B) It reduces the interest-rte risk of borrowers.
• C) It reduces the interest-rate risk of both lenders and borrowers.
• D) It increases the interest-rate risk of both lenders and borrowers.

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Definitions:

Batteries

Devices consisting of one or more electrochemical cells that convert stored chemical energy directly into electrical energy.

Powerful Winds

Strong air movements within the Earth's atmosphere, which can result from various meteorological phenomena and influence weather patterns and climate.

Prairies

Extensive areas of flat or gently undulating grassland, especially in North America, with few if any trees, known for their rich soils and diverse ecosystems.

East And West Coasts

Refers to the eastern and western coastal regions of a continent, often used in context with the United States.