Which of the Following Statements Regarding a 20-Year Monthly Payment

question 78

Multiple Choice

Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

• A) Exactly 10% of the first monthly payment represents interest.
• B) The monthly payments will increase over time.
• C) A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
• D) The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity.
• E) The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.

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