Adjustable-Rate Mortgages Do Not Fully Eliminate Interest-Rate Risk for All

Multiple Choice

Adjustable-rate mortgages do not fully eliminate interest-rate risk for all of the following reasons EXCEPT

A) annual rate increases are limited.
B) the indexes on which they are based are imperfect.
C) financial institutions are reluctant to raise interest rates too much so as to not lose customers.
D) interest rate can only increase by a specified amount during the term of the mortgage.