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:

Functional Structure

An organizational structure that groups together employees who perform similar functions or tasks.

Modular Design

A system in which a process, product, or service is divided into components that can be changed independently and then reintegrated into the system.

Economies Of Scale

The cost advantages that enterprises obtain due to the scale of their operations, typically resulting in lower costs per unit as production increases.

Modular Platform

A design approach where components or systems can be easily interchanged and integrated, enhancing flexibility and scalability.