A situation in which the monthly payments are less than the interest that is due on the loan,and the unpaid interest is thus added to the principal is called
A)partial amortization.
B)negative amortization.
C)reverse amortization.
D)decaying amortization.
E)none of the above.

Question

Quizplus · Accepted Answer

Negative amortization occurs when the monthly payments are not enough to cover the interest due on the loan, causing the unpaid interest to be added to the principal balance. As a result, the overall debt increases instead of decreasing.

A Situation in Which the Monthly Payments Are Less Than