What is an option ARM loan?
What will be an ideal response?
A type of adjustable-rate mortgage (ARM) loans popular during the period between 2001 and 2007 (when ARM issuance reached its peak) was hybrid ARM loans, also referred to as option ARM loans. This product allowed borrowers to be able to qualify for a loan where they otherwise would not be able to do so using traditional mortgage loans. In this loan arrangement, the loan rate is fixed for a contractually specified number of years. At the end of the initial fixed-rate period, the loan resets in a fashion very similar to that of more traditional ARM loans. The reason why these loans are referred to as "option" ARM loans is that the borrower has the option to select among payment options.
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a. the firm has a gross margin of 80 percent b. 80 cents of each retail sales dollar covers the merchandise cost c. stock shortages are 20 percent of sales d. the firm is profitable
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Indicate whether the statement is true or false
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a. 1/2 b. 1 c. 0 d. None of the answers is correct.