You Took Out a 20-Year, $125,000, 4

question 25

Multiple Choice

You took out a 20-year, $125,000, 4.5% loan 8 years ago. What is your current principal balance, assuming payments are made monthly?

• A)$58,588
• B)$65,130
• C)$74,988
• D)$87,867
• E)$88,889

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Definitions:

Interest Rate

The percentage charged or paid for the use of money, typically expressed as an annual percentage of the principal.

Fed

Short for the Federal Reserve System, it is the central banking system of the United States, responsible for monetary policy.

Reserves

Deposits that banks have received but have not loaned out.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender over a specified period.