The Prepayment Privilege Allows the Borrower to Make Early Cash

question 96

True/False

The prepayment privilege allows the borrower to make early cash payments toward the principal balance on their loan.

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Definitions:

Endowment Fund

A financial asset, in the form of donations, made to non-profit organizations that uses the generated income for a specific purpose.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounted cash flow analysis to assess the profitability of an investment.

Future Value

Future value is the value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Interest Rate

The interest rate applied to a loan, frequently shown as an annual percentage of the loan's outstanding figure to the borrower.