The Purpose of a Rate Cap with a Variable Rate

question 98

Multiple Choice

The purpose of a rate cap with a variable rate mortgage is to

• A)minimize interest costs.
• B)prevent changes in the amount of the monthly payment.
• C)increase negative amortization.
• D)restrict the amount by which the interest rate can increase.
• E)lower the escrow account.

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Definitions:

Population Proportion

A measure that describes the fraction of individuals in a population having a particular trait or attribute.

Random Sample

A sample drawn from a population in such a way that every individual has an equal chance of being selected.

Quality Control

The process of ensuring that products and services meet customer expectations and compliance standards through consistent monitoring and regulation.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly the mean.