Question

One reason why adjustable-rate mortgages (ARMs) have become popular has to do with the impact that they have on the interest rate risk that is borne by the parties involved. If interest rates were to rise on a level-payment mortgage (LPM) the interest rate risk of the loan would typically be borne by:
A. the borrower only
B. the lender only
C. both the borrower and lender
D. neither the borrower nor the lender

Answer

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