Which of the Following Statements Is TRUE If You Increase

question 11

Multiple Choice

Which of the following statements is TRUE if you increase your monthly payment above the required loan payment?

• A)The extra portion of the payment does not go to the principal.
• B)You can significantly increase the number of payments needed to pay off the loan.
• C)The extra portion of the payment increases the principal.
• D)You can significantly reduce the number of payments needed to pay off the loan.

---

Definitions:

Required Rate of Return

The minimum annual percentage return an investor expects to earn from an investment to consider it worthwhile.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual, exchange-traded, and closed funds.

Market Risk Premium

The additional yield investors anticipate from maintaining a portfolio with inherent market risk rather than opting for assets free of risk.

Required Rate of Return

The minimum annual percentage return investors expect or demand from an investment, considering the risk involved.