Asked by Wassie rehman on Jun 18, 2024
Verified
Which one of the following is true concerning amortized loans?
A) A loan where annual payments include the interest due plus some set amount of principal is an amortized loan.
B) Amortized loans all have a balloon payment at the end of the loan term.
C) Amortized loan payments consist of interest only.
D) An amortized loan requires only one lump sum payment at the end of the loan term.
E) An amortized loan is a type of a pure discount loan.
Amortized Loans
Loans that are paid off over time through a series of fixed, regular payments where part of each payment covers the interest expense and the remaining amount reduces the principal balance.
Balloon Payment
A large, one-time payment made at the end of a loan term to pay off the remaining balance, typically used in mortgage or bond agreements.
Principal
The initial amount of money borrowed or invested, excluding any interest or dividends.
- Comprehend the structure and calculation of amortized loans versus interest-only and balloon loans.
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Learning Objectives
- Comprehend the structure and calculation of amortized loans versus interest-only and balloon loans.
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