Final answer:
The federal limitation on the shortest adjustment period allowed on an ARM is one month.
Step-by-step explanation:
The federal limitation on the shortest adjustment period allowed on an ARM is one month (option B).
ARM stands for Adjustable Rate Mortgage, which is a type of loan where the interest rate can change over time. The federal limitation on the shortest adjustment period ensures that borrowers are given at least one month notice before the interest rate on their ARM loan can change.
By having a minimum adjustment period, borrowers have time to plan for potential changes in their monthly mortgage payments and make any necessary adjustments to their budget or financial situation.