Which of the Following Statements Regarding a 20-Year (240-Month) $225,000

question 28

Multiple Choice

Which of the following statements regarding a 20-year (240-month) $225,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

• A) The outstanding balance declines at a slower rate in the later years of the loan's life.
• B) The remaining balance after three years will be $225,000 less one third of the interest paid during the first three years.
• C) Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant.
• D) Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant.
• E) The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.

---

Definitions:

Fetal Development

The process of development and growth of a fetus inside the womb from conception to birth.

Oxytocin

A hormone produced by the hypothalamus and released by the pituitary gland, playing roles in childbirth, lactation, and social bonding.

Prostaglandins

A group of lipid compounds that are produced within the body's tissues and have various functions, including involvement in inflammation and pain.

Estrogen

Substance that exerts biologic effects characteristic of estrogen hormone, such as stimulating female secondary sexual characteristics, growth, and maturation of long bones, and help controlling the menstrual cycle.