Negative Amortization Has the Effect Of

question 97

Multiple Choice

Negative amortization has the effect of:

• A)extending the number of payments to pay off the mortgage.
• B)decreasing the number of payments to pay off the mortgage.
• C)a lower escrow account.
• D)lower interest rates.
• E)a lower down payment.

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Definitions:

Bond Interest Expense

The cost incurred by an entity for borrowing funds through issuing bonds, payable to bondholders as interest.

Semiannual

Occurring twice a year; every six months.

Par Value

The face value of a bond or stock, as stated by the issuing company, which often bears no relation to its market value.

Straight-Line Method

A depreciation technique in which an asset's cost is evenly reduced over its useful life, assuming constant use and value decline.