During a period when interest rates are very low by historical standards and are expected to increase substantially over time, individuals should choose
A) an ARM with a rate that adjusts after three years.
B) a fixed-rate mortgage.
C) an ARM that adjusts after one year.
D) an ARM with a rate that adjusts every year for five years and then converts to a fixed rate.

Question

Quizplus · Accepted Answer

A fixed-rate mortgage is preferable in a scenario where interest rates are very low but expected to rise substantially over time, as it locks in the low rates for the duration of the loan, protecting borrowers from future rate increases.

During a Period When Interest Rates Are Very Low by Historical