The term “periodic rate cap” refers to:
  1. an adjustable rate mortgage
  2. a limit on the amount the interest rate can increase or decrease during any one adjustment period
  3. conventional fixed-rate loans
  4. both A and B
Explanation
Answer: D. For an adjustable rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be is called a periodic rate cap.
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