From a savings institution's point of view, although adjustable-rate mortgages reduce the adverse impact of ____ interest rates, they also reduce the favorable impact of ____ interest rates.
A)rising; rising
B)declining; declining
C)rising; declining
D)declining; rising
E)none of the above

Question

Quizplus · Accepted Answer

Adjustable-rate mortgages are designed to reduce the adverse impact of rising interest rates, but they also reduce the favorable impact of declining interest rates. As interest rates rise, the interest rate on an adjustable-rate mortgage will also rise, but as interest rates decline, the interest rate on an adjustable-rate mortgage may not decline as much or as quickly as the prevailing rate, reducing the savings. Therefore, adjustable-rate mortgages are most advantageous during times of high or rising interest rates.

From a Savings Institution's Point of View, Although Adjustable-Rate Mortgages