Which of the Following Statements Best Describes the Behavior Over

question 281

Multiple Choice

Which of the following statements best describes the behavior over time of the components of equal mortgage payments?

• A) The proportion of interest expense to payment of principal remains the same.
• B) Interest expense increases and payment of principal decreases.
• C) Payment of principal increases and interest expense decreases.
• D) Both payment of principal and interest expense decrease.

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Definitions:

Book Value Per Share

A financial measure used to assess the per-share value of a company based on its equity available to common shareholders, divided by the number of outstanding shares.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue, representing the company's profitability over a specified period.

Return on Equity

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested, expressed as a percentage.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest in the company.