To Encourage Borrowers to Accept Adjustable Rate Mortgages (ARMs)rather Than

question 13

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)floating rate
• B)teaser rate
• C)index rate
• D)discount rate

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Definitions:

Sum

The result obtained by adding two or more numbers.

Scientific Notation

A way of expressing numbers that are too large or too small to be conveniently written in decimal form, using powers of ten.

Quadratic Polynomial

A polynomial of degree two, typically written in the form ax^2 + bx + c where a, b, and c are constants.

Cubic Polynomial

A polynomial of degree three, characterized by an equation of the form ax^3 + bx^2 + cx + d, where a, b, c, and d are constants and a ≠ 0.