Which of the following statements best describes a fully amortised term loan?
A) A fully amortised term loan is an interest-only loan with principal repayable at maturity.
B) A fully amortised term loan has periodic repayments, including interest and principal reduction.
C) Interest repayments on a fully amortised term loan are fixed for the period of the loan.
D) A fully amortised term loan is a 'low-start' loan whose repayments are increased over the term.

Question

Quizplus · Accepted Answer

A fully amortised term loan requires periodic repayments that consist of both interest and principal reduction. This means that the loan is fully paid off by the end of the term, unlike an interest-only loan. In contrast to a “low-start” loan, the periodic repayments for a fully amortised term loan remain steady throughout the term of the loan.

Which of the Following Statements Best Describes a Fully Amortised