Finance
What does it mean when a mortgage loan is 'amortized'?
AThe interest rate adjusts annually
BThe loan is paid off through equal periodic payments that cover both principal and interest✓ Correct
CThe loan has a balloon payment at maturity
DThe borrower pays interest only for the first 10 years
Explanation
An amortized loan is paid off through a series of equal periodic payments (typically monthly) that include both principal and interest. Early payments are mostly interest; later payments are mostly principal. After all payments, the loan is fully paid.
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