Which of the Following Statements Regarding a 30-Year Monthly Payment

question 116

Multiple Choice

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?

• A) Exactly 8% of the first monthly payment represents interest.
• B) The monthly payments will decline over time.
• C) A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
• D) The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity.
• E) The amount representing interest in the first payment would be higher if the nominal interest rate were 6% rather than 8%.

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust all inputs in response to market conditions.

Short Run

A period in economics during which at least one input or resource is fixed, limiting the ability of the firm to adjust all inputs freely.

Market Demand

Represents the total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices over a specific period of time.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage.