As Short-Term Interest Rates Began to Rise in 2005, Which

question 328

Multiple Choice

As short-term interest rates began to rise in 2005, which one of the following mortgage loan categories experienced the largest increase in default and foreclosure rates?

• A) fixed rate mortgages to prime borrowers
• B) fixed rate mortgages to sub-prime borrowers
• C) adjustable rate mortgages extended to both prime and sub-prime borrowers
• D) adjustable rate mortgages to sub-prime borrowers only; the default and foreclosure rates of these loans extended to prime borrowers declined