A financial arrangement whereby a lump-sum obligation is incurred at compound interest now, such as a loan, and is paid off or liquidated by a series of equal periodic payments for a specified period of time is known as amortization.

Question

Quizplus · Accepted Answer

Amortization refers to the process of spreading out a loan into a series of fixed payments over time, where part of each payment goes toward the loan principal and part toward interest, effectively reducing the balance owed until it is fully paid off or amortized.

A Financial Arrangement Whereby a Lump-Sum Obligation Is Incurred at Compound