Which of the Following Statements Regarding a 20-Year (240-Month) $225,000

question 28

Multiple Choice

Which of the following statements regarding a 20-year (240-month) $225,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

• A) The outstanding balance declines at a slower rate in the later years of the loan's life.
• B) The remaining balance after three years will be $225,000 less one third of the interest paid during the first three years.
• C) Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant.
• 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:

Biological Processes

Complex sequences of actions or changes happening in living organisms, necessary for their survival, growth, and reproduction.

Ionic Bond

A chemical bond formed between two atoms when one atom transfers an electron to another, leading to the attraction between positively and negatively charged ions.

Hydrogen Bond

An insubstantial attachment between two molecules produced by the electrostatic allure between a proton of one molecule and an electronegative atom of the other.

Ions

Atoms or molecules that have lost or gained one or more electrons, thus acquiring an electric charge.