Which is true of variable rate loans? A) the rate can only go up B) the interest rate can go up or down, depending upon the index it is tied to C) the interest rate can fall below 0 D) the rate can only go down
Which is true of variable rate loans? A) the rate can only go up B) the interest rate can go up or down, depending upon the index it is tied to C) the interest rate can fall below 0 D) the rate can only go down
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Which is true of variable rate loans?
A) the rate can only go up
B) the interest rate can go up or down, depending upon the index it is tied to
C) the interest rate can fall below 0
D) the rate can only go down
Expert Solution
Step 1: Introduction:
Variable rate loans, also known as adjustable-rate loans, have interest rates that can fluctuate over the life of the loan based on changes in the index to which they are tied. This means that the interest rate can go up or down depending on market conditions, economic indicators, or other factors that impact the index.
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