Which of the following are TRUE of fixed payment loans?
A)The borrower repays both the principal and interest at the maturity date.
B)Installment loans and mortgages are frequently of the fixed payment type.
C)The borrower pays interest periodically and the principal at the maturity date.
D)Commercial loans to businesses are often of this type.

Question

Quizplus · Accepted Answer

Fixed payment loans require the borrower to make regular payments that include both principal and interest, with the same payment amount due every period until the loan matures. Installment loans and mortgages are common examples of fixed payment loans. Option A is incorrect because the borrower pays off both principal and interest in each payment. Option C is incorrect because fixed payment loans require regular payment of both principal and interest. Option D is incorrect because commercial loans to businesses can have different structures with varying payment requirements.

Which of the Following Are TRUE of Fixed Payment Loans