Question

What is true of an adjustable rate mortgage?

Answer 1

Answer: B. the interest rate may change depending on the condition of the economy.

Step-by-step explanation:

By definition, in a adjustable-rate mortgage (which can be identified as ARM), the interest rates can fluctuates, this means that it can change periodically.

Therefore, the interest rate is fixed for a period of time and then it varies based on the index it is tied to. This index is set by market situation.

Then, keeping this on mind, the correct answer is the option B, which is: The interest rate may change depending on the condition of the economy.