Question
5. Each of these statements describes a variable rate loan EXCEPT __ a. Typically starts with a lower interest rate than a fixed-rate loan b. Is riskier for the borrower because the interest rate could increase substantially c. Is almost always a better option d. Can increase or decrease the interest rate throughout the loan
Solution
3.5
(236 Votos)
Leonardo
Mestre · Tutor por 5 anos
Resposta
The correct answer is 'c'.
Explicação
## Step 1A variable rate loan is a type of loan where the interest rate can change over time. This is in contrast to a fixed-rate loan, where the interest rate remains constant throughout the loan term.## Step 2Option a states that a variable rate loan typically starts with a lower interest rate than a fixed-rate loan. This is true because the initial interest rate of a variable rate loan is usually lower than that of a fixed-rate loan.## Step 3Option b states that a variable rate loan is riskier for the borrower because the interest rate could increase substantially. This is also true because the interest rate of a variable rate loan can increase over time, which can make the loan more expensive for the borrower.## Step 4Option d states that a variable rate loan can increase or decrease the interest rate throughout the loan. This is true because the interest rate of a variable rate loan is not fixed and can change over time.## Step 5Option c states that a variable rate loan is almost always a better option. This is not necessarily true because whether a variable rate loan is a better option depends on the borrower's financial situation and the terms of the loan. A variable rate loan can be more expensive over time if the interest rate increases, which could make it a less favorable option for some borrowers.