Which of the following are features of an adjustable-rate mortgage and how do payments respond?

• A. Index, margin, rate caps, and adjustment periods; payments can fluctuate with index changes and caps.
• B. Fixed interest rate for the full term with a constant payment.
• C. Fixed principal payments only, with no interest rate variability.
• D. Interest-only payments for the life of the loan, ending with a balloon.

Answer: (A)