California Real Estate Practice Exam

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Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

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What type of note reduces the bank's risk of changing interest rates?

Adjustable rate note
Fixed rate note
Graduated payment note
Balloon payment note

The correct answer is: Adjustable rate note

An adjustable rate note reduces the bank's risk of changing interest rates because the interest rate on the loan can fluctuate with market conditions, rather than being fixed at one rate. This allows the bank to more easily adjust to changes in the economy and mitigate risk. The other options, fixed rate note, graduated payment note, and balloon payment note, all have fixed interest rates that do not change based on market conditions.