A Payment Cap on an Adjustable-Rate Mortgage Can Result in Negative

Multiple Choice

A payment cap on an adjustable-rate mortgage can result in negative amortization when:

A) interest rates decrease but the amount of the monthly payment does not.
B) the amount of the monthly payment increases and interest rates do not.
C) the amount of the monthly payment decreases and interest rates do not.
D) interest rates rise but the amount of the monthly payment does not.
E) the loan stretches out to 40 years.