Which of the following statements regarding fixed-rate loans is true?
A) Fixed-rate loans are preferable if interest rates are expected to rise.
B) The cost of fixed-rate loans increases with an increase in the market interest rate.
C) The cost of fixed-rate loans decreases with a decrease in the market interest rate.
D) Fixed-rate loans are preferable if interest rates are expected to fall.
E) Fixed-rate loans have periodic adjustment dates, at which time the interest rate and monthly payment are adjusted as necessary.

Question

Quizplus · Accepted Answer

Fixed-rate loans are preferable if interest rates are expected to rise because the interest rate on these loans remains the same throughout the term of the loan, protecting borrowers from paying more as market rates increase.

Which of the Following Statements Regarding Fixed-Rate Loans Is True