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In at least 4 -5 sentences, please distinguish between the initial rate of interest and the...

In at least 4 -5 sentences, please distinguish between the initial rate of interest and the expected yield on an ARM.  What is the general relationship between the two?  How do they generally reflect ARM terms?

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The initial rate if interest on an Adjustable Rate Mortgage (ARM) is the rate of interest that is applicable on the loan at its start. However, over time due to market conditions and the conditions of the overall economy, the interest rates change and there would be different interest rates at different period of times. Because of this the expected yield on the ARM will change during the course of the mortgage. The costs of each category of the loan will be added to the initial interest rate which will result in the expected yield.

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