Question

fluctuations in interest rates can have both good and bad effects.
which loan type is not affected by rising interest rates?
choose 1 answer:
a adjustable - rate mortgage
b fixed - rate mortgage
c car loans
d private student loans

Explanation:

To determine which loan type is unaffected by rising interest rates, we analyze each option:

• Option A (adjustable - rate mortgage): Its interest rate adjusts with market rates, so rising interest rates will increase its rate.
• Option B (fixed - rate mortgage): The interest rate is set at the start and remains constant throughout the loan term, so it is not affected by rising interest rates.
• Option C (car loans): Most car loans (especially variable - rate ones) or even some fixed - rate car loans may be impacted by market rate changes, and generally, rising interest rates can affect the overall cost or the rate structure (if variable).
• Option D (private student loans): Many private student loans have variable rates or can be affected by market interest rate changes, so rising rates will impact them.

Answer:

B. fixed - rate mortgage