Question

For a fixed loan amount, what happens to the monthly payment as the annual rate increases? a. as the annual rate increases, the monthly payment increases c. as the annual rate increases, the monthly payment stays the same b. as the annual rate increases, the monthly payment decreases d. no correlation

Answer 1

a. as the annual rate increases, the monthly payment increases

Explanation:

EDGE 2021

Answer 2

If the annual rate increases nothing will happen to the monthly payment, so the answer is C as the annual rate increases, the monthly payment stays the same. Once the fixed-rate payment (loan) is processed there is no chance for any changes as this procedure means that lender is under a fixed-rate loan each payment period.