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If One of the Terms of an ARM Read: Interest

Question 13

Multiple Choice

If one of the terms of an ARM read: Interest is capped at 2%/5%,what would that mean?


A) The borrower can choose the cap he wants by simply circling the appropriate choice.
B) The interest rate has a 2% annual cap rate and a 5% lifetime cap rate.
C) The interest rate has a 5% annual cap rate and a 2% lifetime cap rate.
D) The interest rate has a 2% annual cap rate and a 5% floor cap rate.

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