What best determines whether a borrower’s investment on an adjustable rate loan goes up or down?
a fixed interest rate
a bank’s finances
a market’s condition
a person’s finances
What best determines whether a borrower’s investment on an adjustable rate loan goes up or down?
Share
The correct answer is a market’s condition.
An adjustable-rate loan has interest rates that fluctuate based on market conditions. Specifically, they are typically tied to an index that reflects the cost of borrowing in the market, which means as market rates increase or decrease, so will the borrower’s interest rate, affecting their investment.
If you have more questions or need further explanations, feel free to ask or check the extended services page for more assistance!