Which of the Following Statements Regarding a 20-Year Monthly Payment

question 118

Multiple Choice

Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

• A) Exactly 10% of the first monthly payment represents interest.
• B) The monthly payments will increase over time.
• C) A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
• D) The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity.
• E) The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.

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Definitions:

Bargaining Strength

The power that parties have during negotiations, influenced by their resources, alternatives, and strategies.

Economic Power

The ability of a country, corporation, or group to influence economic events, conditions, and policies at a local, national, or international level.

Large Corporations

Companies that operate on a grand scale in terms of revenue, employees, or market share, and usually have a wide geographical presence.

National Labor Relations Act

The National Labor Relations Act (NLRA) is a foundational statute of US labor law that guarantees workers the right to form unions and engage in collective bargaining.