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Exam CRCM topic 1 question 97 discussion

Actual exam question from ABA's CRCM
Question #: 97
Topic #: 1
[All CRCM Questions]

On which of the following adjustable-rate loans must the bank use an index beyond its control?

  • A. A loan to purchase a home to refurnish and resell for a profit
  • B. A loan to purchase a vacation home
  • C. A loan to purchase a duplex where the borrower will live in one of the units
  • D. A loan to purchase a home to be used as rental property
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Suggested Answer: C 🗳️
by Cam22 at March 15, 2024, 3:13 a.m.

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Dex24
6 months, 3 weeks ago
Page 561 of the printout version and 567 of the PDF version.
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Dex24
6 months, 3 weeks ago
c, page 561
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Cam22
8 months, 3 weeks ago
Selected Answer: D
In this scenario, the bank would typically use an index beyond its control to determine the interest rate for the adjustable-rate loan. This is because the interest rate on loans for rental properties is often tied to broader market indexes, such as the London Interbank Offered Rate (LIBOR) or the Cost of Funds Index (COFI), which are not directly controlled by the bank.
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