INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-You made an $800 mortgage payment.The interest on the mortgage for this month was $850.You have just experienced [negative | positive] amortization.
A)for the first item
B)for the second item
C)if neither item will correctly complete the

Question

Quizplus · Accepted Answer

Negative amortization occurs when the monthly payment is not enough to cover the interest on the loan, and as a result, the unpaid interest is added to the principal balance. In this case, the interest is higher than the payment, so the principal balance would increase, indicating negative amortization.

INSTRUCTIONS: Choose the Word or Phrase in [ ] Which