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

Question

Quizplus · Accepted Answer

Adjustable-rate mortgages (ARMs) help savings institutions by reducing the negative effects of rising interest rates since the rates on these mortgages can adjust upwards. However, they also limit the benefits of declining interest rates because the mortgage rates can adjust downwards, reducing the institution's interest income.

From the Perspective of a Savings Institution, Although Adjustable-Rate Mortgages