Valuation and Financing Practice Question

Question

An escrow officer requests clarification from the broker involving adjustable-rate loans. The parties need a practical answer before moving forward. Which answer best applies the rule? (Item 131)

Answer choices

1. A. It is valid only when the buyer pays cash and no lender is involved.
2. B. It prevents any later disclosure, even when new facts become known.
3. C. Recognize index, margin, adjustment period, and caps.
4. D. It applies only to commercial property and never to residential transactions.

Correct Answer

C. Recognize index, margin, adjustment period, and caps.

Explanation

The correct answer is C because adjustable-rate loans requires candidates to recognize index, margin, adjustment period, and caps. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.

Question details

• Difficulty: easy
• Domain: Valuation and Financing
• Objective: adjustable-rate loans

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