Two Loans Have the Same Interest Rate and Maturity

question 18

Multiple Choice

Two loans have the same interest rate and maturity. Loan A has a 15-year amortization rate. Loan B has a 30-year amortization rate. In comparing these two loans from a borrower's perspective:

• A) The advantage of Loan A is lower monthly payments and lower balloon payment at maturity.
• B) The advantage of Loan B is lower monthly payments and lower balloon payment at maturity.
• C) The advantage of Loan A is lower monthly payments but its disadvantage is a higher balloon at maturity.
• D) The advantage of Loan B is lower monthly payments but its disadvantage is a higher balloon at maturity.

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Definitions:

Company Attendance Records

Documentation or data pertaining to the presence or absence of employees at work within a company, often used for payroll or performance evaluations.

Subjective Performance Measure

An evaluation of an individual's work performance based on opinions, feelings, or perspectives rather than objective data.

Contrast Effect

occurs when the comparison of two or more objects or options significantly affects the perception and judgment of those items.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution of data, aiming to provide an accurate description of the data's center.