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VARVARA [1.3K]
2 years ago
6

If a payment cap is applied and the required payment does not cover the interest expense, the unpaid interest is added to the lo

an thereby increasing the loan balance even though the required payment is being made. This is known as ___________.
Business
1 answer:
spin [16.1K]2 years ago
6 0

The condition when a payment cap is applied and the required payment does not cover the interest expense, the unpaid interest is added to the loan thereby increasing the loan balance even though the required payment is being made, is known as a negative amortization.

<h3>What is negative amortization?</h3>

A condition where the amount owed by an individual keeps adding even after the repayments are done is known as negative amortization.

Such condition of a negative amortization arises as the amount being repaid does not fully or partly cover the interest amount.

Hence, the significance of negative amortization is aforementioned.

Learn more about negative amortization here:

brainly.com/question/22232264

#SPJ1

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Explanation:

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3 years ago
Both the medical model and the public health model have in common:
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3 years ago
Aluminum maker Alcoa has a beta of about 1.85​, whereas Hormel Foods has a beta of 0.39. If the expected excess return of the ma
Nady [450]

Answer and Explanation:

The computation is shown below:

As we know that

According to the Capital Asset Pricing Model (CAPM) formula

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

And, the market rate of return - Risk-free rate of return is also known as the market risk premium

As we can see that the Alcoa contains high beta as compared to Hormel Foods so the Alcoa has a higher equity cost of capital

And, the higher rate is

= (Excess return of the market) × (Alcoa beta - Hormel foods beta)

= (3%) × (1.85 - 0.39)

= 3% × 1.46

= 4.38%

8 0
3 years ago
On july 1 of the current calendar year, plum co. paid $7,500 cash for management services to be performed over a two-year period
morpeh [17]

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                           To Prepaid Expenses.....................................................$1875

(Being prepaid expenses recognised for the year)


6 0
3 years ago
Read 2 more answers
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alexira [117]
True.
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3 years ago
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