A Variable-Rate Mortgage

question 51

Multiple Choice

A variable-rate mortgage:

• A)eliminates the risk of expected inflation.
• B)increases the efficiency of the economy.
• C)is offered at an interest rate that increases with inflation.
• D)is a fixed interest rate on a particular loan, but that fixed rate varies depending on the duration of the loan.
• E)shifts the risk of unexpected inflation from the borrower to the lender.

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Definitions:

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