FinancingQuestion 77 of 120
A fully amortized loan is one in which:
a.Regular payments retire the entire principal and interest by the end of the term
b.Only interest is paid until maturity
c.A large balloon payment ends the loan
d.The balance grows over time
Explanation
A fully amortized loan is repaid through regular equal payments that cover both interest and principal, leaving a zero balance at the end of the term. Early payments are mostly interest, with principal reduction increasing over time. This contrasts with interest-only or balloon loans.
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