In Comparing an Adjustable Rate Mortgage (ARM) with a Fixed

Multiple Choice

In comparing an adjustable rate mortgage (ARM) with a fixed rate mortgage (FRM) :

A) Both the borrower and lender bear more interest rate risk with the ARM than with the FRM.
B) Both the borrower and the lender bear less interest rate risk with the ARM than with the FRM.
C) The ARM borrower bears more interest rate risk, but the ARM lender bears less interest rate risk, than with the FRM.
D) The ARM borrower bears less interest rate risk, but the ARM lender bears more interest rate risk, than with the FRM.