They Saw in the Newspaper That They Can Get a Fixed

question 95

Multiple Choice

They saw in the newspaper that they can get a fixed rate mortgage for 6.65% or a two-year ARM with an initial rate of 5.50%.Which is true about their mortgage choices?

• A)The fixed-rate mortgage has an attractive rate but is more risky for them.
• B)The ARM initial rate is lower so their PITI will be lower.
• C)Due to Maria's job the ARM would be the better choice.
• D)Both B and C are correct.

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Definitions:

Inelastic

Describes a situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Remittances

Money sent by migrants back to their home countries, often to support family members financially.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a specific time period.

Elasticity

In economics, elasticity measures how much the quantity demanded or supplied changes in response to a change in price or other factors.