Question 10 An amortized loan: Multiple Choice points Requires the principal amo

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Question 10

An amortized loan: Multiple Choice points Requires the principal amount to be repaid in even increments over the life of the loan. Repays both the principal and the interest in one lump sum at the end of the loan term. May have equal or increasing amounts- but not decreasing amounts- of principal paid off with each loan payment. Requires that all interest be repaid on a monthly basis while the principal is repaid at the end of the loan term. Requires that all payments be equal in amount and include both principal and interest.

Explanation / Answer

Option E. requires that all payments be equal in amount and include both principal and interest.

Amortization will be done in an all equal payment manner where the interest component will decrease over time and will have a vice-cersa situation for principal.

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