FinancingQuestion 78 of 120
In an adjustable-rate mortgage, the published economic indicator to which the interest rate is tied is called the:
a.Margin
b.Index
c.Cap
d.Point
Explanation
An adjustable-rate mortgage's interest rate is calculated by adding a fixed margin to a fluctuating index such as a Treasury or SOFR-based rate. The index moves with market conditions, while the margin stays constant. Rate caps limit how much the rate can change.
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