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As an alternative to the fixed-rate mortgage, borrowers can often obtain an adjustable rate mortgage...

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Finance

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As an alternative to the fixed-rate mortgage, borrowers can often obtain an adjustable rate mortgage which has an initial interest rate below that of fixed-rate loans. Which of the following statements best explains the rate difference? Lenders accept a lower initial rate because the borrower is a better credit risk Lenders accept a lower initial rate because the collateral is a better credit risk Lenders accepta lower initial rate because the borrower bears some of the risk of future interest rate changes Lenders are confused and don't understand the time value of money

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