How Is the Principal Amount of an Interest-Only Loan Repaid

question 94

Multiple Choice

How is the principal amount of an interest-only loan repaid?

• A)The principal is forgiven over the loan period so does not have to be repaid.
• B)The principal is repaid in equal increments and included in each loan payment.
• C)The principal is repaid in a lump sum at the end of the loan period.
• D)The principal is repaid in equal annual payments.
• E)The principal is repaid in increasing increments through regular monthly payments.

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Definitions:

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A statistical measure that shows changes in the price level of a basket of consumer goods and services over time, used to gauge inflation or deflation.

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Price Index

A measure that examines the average change in prices of goods and services over time in an economy.