If One of the Terms of an ARM Read: Interest

question 13

Multiple Choice

If one of the terms of an ARM read: Interest is capped at 2%/5%,what would that mean?

• A) The borrower can choose the cap he wants by simply circling the appropriate choice.
• B) The interest rate has a 2% annual cap rate and a 5% lifetime cap rate.
• C) The interest rate has a 5% annual cap rate and a 2% lifetime cap rate.
• D) The interest rate has a 2% annual cap rate and a 5% floor cap rate.

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Definitions:

Confidence Interval

A range of values derived from sample data that is likely to contain the true population parameter with a certain level of confidence.

Regular Exercise Program

A consistent routine or schedule of physical activities designed to improve or maintain physical fitness and health.

Margin of Error

An expression of the amount of random sampling error in a survey's results, indicating a confidence interval within which the true population parameter is expected to lie.

Confidence Interval

An amalgamation of values, gathered from sample statistics, projected to house the value of a covert population parameter.