Which of the Following Is NOT True of a Fixed

question 11

Multiple Choice

Which of the following is NOT true of a fixed payment loan?

• A)The borrower is required to make regular periodic payments to the lender.
• B)The payments made by the borrower include both interest and principal.
• C)The borrower is left with a substantial unpaid principal at the maturity of the loan.
• D)A home mortgage is an example of fixed payment loan.

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Definitions:

Call Option

An option contract that gives the holder the right, but not the obligation, to buy a specified quantity of an underlying asset at a set price within a specific period.

Strike Price

The predetermined price at which an option's contract can be exercised, allowing for the purchase or sale of the underlying asset.

Strike Price

The price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Risk-free

An investment category that promises return payments with zero default risk, often exemplified by treasury bonds of stable governments.