Which ONE of the following statements is true about amortization?

Question

Quizplus · Accepted Answer

A) Amortization refers to the way the borrowed amount (principal) is paid down over the life of the loan.

This statement is true. Amortization is the process of paying off a loan over time in equal payments. Each payment consists of both principal and interest, with a greater portion of the payment going toward interest at the beginning of the loan term.

B) With an amortized loan, each loan payment contains some payment of principal and an interest payment.

This statement is also true. With an amortized loan, each payment made toward the loan includes a portion that goes toward paying down the principal balance and a portion that goes toward paying interest on the remaining principal.

C) A loan amortization schedule is just a table that shows the loan balance at the beginning and end of each period, the payment made during that period, and how much of that payment represents interest and how much represents repayment of principal.

This statement is true. A loan amortization schedule shows the breakdown of each loan payment, including how much of the payment goes toward paying principal and how much goes toward paying interest. It also shows the remaining loan balance at the end of each payment period.

Therefore, all of the statements are true and the answer is D.

Which ONE of the Following Statements Is True About Amortization