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Question 2 5 pts When you get down to the heart of the matter, asymmetric interest rate risk bearing for the borrower and the lender
Question 2 5 pts When you get down to the heart of the matter, asymmetric interest rate risk bearing for the borrower and the lender in fixed rate mortgage loans stems from a provision in most promissory notes for residential consumer loans that grants borrowers the option to prepay their loans at any time. True O False Question 3 5 pts Which of the following is FALSE regarding arm loans? O ARMs with more frequent adjustments to the composite rate are more risky to lenders than ARMs with less frequent adjustments O ARMs with shorter term index means increased risk to borrower because shorter term index rates have more volatility Lenders only originate ARMs if the expected benefit from shifting interest rate risk is greater than the increased risk of borrower default caused by adjusting composite rates O none of the answer choices is FALSE
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