Modified True or False T means Correct and F means Wrong Scenario: A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments. The annual payments would be larger if the interest rate were lower. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan. The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were lower. The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher. The proportion of interest versus principal repayment would be the same for each of the 7 payments. Group of answer choices T,T,T,T F,T,F,T F, F, F, F T,T,F,T F,T,F,F F,F,F,T T,F,T,F
Modified True or False T means Correct and F means Wrong Scenario: A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments. The annual payments would be larger if the interest rate were lower. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan. The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were lower. The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher. The proportion of interest versus principal repayment would be the same for each of the 7 payments. Group of answer choices T,T,T,T F,T,F,T F, F, F, F T,T,F,T F,T,F,F F,F,F,T T,F,T,F
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
56.
Modified True or False
T means Correct and F means Wrong
Scenario: A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments.
- The annual payments would be larger if the interest rate were lower.
- If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan.
- The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were lower.
- The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher. The proportion of interest versus principal repayment would be the same for each of the 7 payments.
Group of answer choices
T,T,T,T
F,T,F,T
F, F, F, F
T,T,F,T
F,T,F,F
F,F,F,T
T,F,T,F
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