Which of the Following Statements Regarding a 30-Year Monthly Payment

question 7

Multiple Choice

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?

• A) exactly 8% of the first monthly payment represents interest.
• B) the monthly payments will decline over time.
• C) a smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
• D) the total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity.
• E) the amount representing interest in the first payment would be higher if the nominal interest rate were 6% rather than 8%.

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