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Adjustable-rate mortgages versus fixed-rate mortgages

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How does the initial rate on adjustable-rate mortgages (ARMs) differ from the rate on fixed-rate mortgages? Why? Can you please explain how caps on ARMs can affect a financial institution's exposure to interest rate risk.

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How the initial rate on adjustable-rate mortgages differs from the rate on a fixed-rate mortgage is determined.

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The rates on adjustable-rage mortgages (ARMs) differ from the rate on the fixed-rate mortgages in that this ...

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