Finance
Amortization refers to the process of:
AIncreasing the loan balance through negative amortization
BGradually paying down a loan balance through scheduled principal and interest payments✓ Correct
CConverting an adjustable-rate loan to a fixed rate
DExtending the loan term to reduce monthly payments
Explanation
Amortization is the process of systematically reducing a loan balance through regular payments that include both principal and interest. Early payments are mostly interest; over time, an increasing proportion applies to principal.
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