as you pay monthly, the amount going toward principal starts out small, and gradually grows larger month by…

as you pay monthly, the amount going toward principal starts out small, and gradually grows larger month by month. 1 point\namortization\namortensia\napr\nwhich is true for amortization? * 1 point\npays more of the interest at the beginning of the loan\npays more of the interest at the end of the loan\nwhy is there a difference between interest charged and interest earned at banks? * 1 point\nthe federal reserve controls them\nbanks are profit - making institutions\nit adds to the debt\nit is caused by the federal funds rate

as you pay monthly, the amount going toward principal starts out small, and gradually grows larger month by month. 1 point\namortization\namortensia\napr\nwhich is true for amortization? * 1 point\npays more of the interest at the beginning of the loan\npays more of the interest at the end of the loan\nwhy is there a difference between interest charged and interest earned at banks? * 1 point\nthe federal reserve controls them\nbanks are profit - making institutions\nit adds to the debt\nit is caused by the federal funds rate

Answer

Brief Explanations:

  • In amortization, the monthly payment first goes mostly towards interest and less towards principal at the start, gradually changing over time. So the term for the first - described concept is amortization.
  • For amortization, since the principal balance is high at the beginning of a loan, more interest is paid initially as interest is calculated based on the principal amount.
  • Banks are profit - making institutions. They charge a higher interest rate on loans (interest charged) than the interest rate they pay on deposits (interest earned) to make a profit.

Answer:

  • First question: amortization
  • Second question: Pays more of the interest at the beginning of the loan
  • Third question: Banks are profit making institutions