Which of the Following Statements Regarding a 15-Year (180-Month) $225,000

question 125

Multiple Choice

Which of the following statements regarding a 15-year (180-month) $225,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

• A) The outstanding balance declines at a faster rate in the later years of the loan's life.
• B) The remaining balance after three years will be $125,000 less one third of the interest paid during the first three years.
• C) Because the outstanding balance declines over time, the monthly payments will also decline over time.
• 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.

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Definitions:

Clarity

The quality of being clear, understandable, and free from ambiguity in expression or thought.

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The various methods or approaches individuals use to convey their thoughts, feelings, and information to others, including verbal, non-verbal, and written forms.

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