With a fixed-rate mortgage, the LENDER bears the interest rate risk and with an arm, the BORROWER bears the interest rate risk.
Interest is the price you pay for borrowing money or the cost you charge for lending money. Interest is usually given as an annual percentage of the loan amount. This percentage is called the interest rate on the loan. For example, if you deposit money in a savings account, the bank will pay you interest.
Interest is a monetary fee for the privilege of borrowing money, usually expressed as an annual rate (APR). Interest is the amount a lender or financial institution receives for lending money.
Interest is calculated in its simplest form as a percentage of the principal. For example, if a friend borrows her $100 and agrees to pay it back with 5% interest, in interest he will only pay her 5% of the $100: $100 (0.05) = $5.
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