Which of the following statements is true of amortization?

Question

Quizplus · Accepted Answer

Amortization refers to the process of paying off a loan over time with regular payments. The amortization schedule provides a breakdown of each payment, including the portion that goes towards the principal, the portion that goes towards interest, and the remaining principal balance after each payment. Therefore, option D is the correct statement about amortization. Option A is incorrect as amortization does not solely refer to the total value to be paid by the borrower at the end of maturity. Option B is incorrect as the amortization schedule represents both the principal and interest portions of the loan. Option C is incorrect as the computation of loan amortization takes into account both the principal and interest components of the loan.

Which of the Following Statements Is True of Amortization