To Encourage Borrowers to Accept Adjustable Rate Mortgages (ARMs) Rather

question 33

Multiple Choice

To encourage borrowers to accept adjustable rate mortgages (ARMs) rather than level-payment mortgages, mortgage originators generally offer an initial short-term introductory rate that is less than the prevailing market mortgage rate. This rate is referred to as a(n) :

• A) margin rate
• B) teaser rate
• C) index rate
• D) discount rate

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Definitions:

Fundamental Attribution Error

The tendency to overestimate the effect of personality or disposition and underestimate the influence of situational factors when explaining others' behaviors.

East Asians

People originating from countries in the eastern part of Asia, usually including China, Japan, and Korea, among others.

Americans

Residents or citizens of the United States of America.

Physically Attractive People

Individuals perceived to have physical features that are aesthetically pleasing or beautiful to others.