Which of the Following Statements Regarding a 15-Year (180-Month)$225, 000

question 60

Multiple Choice

Which of the following statements regarding a 15-year (180-month) $225, 000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

• A) The outstanding balance declines at a faster rate in the later years of the loan's life.
• B) The remaining balance after three years will be $125, 000 less one third of the interest paid during the first three years.
• C) Because the outstanding balance declines over time, the monthly payments will also decline over time.
• D) Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant.
• E) The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.

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Definitions:

Frequency

The rate at which something occurs or is repeated over a particular period of time or in a given sample.

Sound Wave

A wave of compression and rarefaction, by which sound is propagated in an elastic medium such as air.

Binocular Cues

Are visual information taken in by two eyes that enable a sense of depth perception, such as stereopsis, convergence, and disparity.

Distances

Measurements of the physical space between two points, which can also metaphorically refer to emotional or relational separation between individuals or groups.