Which one of the following is true concerning amortized loans?

A) A loan where annual payments include the interest due plus some set amount of principal is an amortized loan.
B) Amortized loans all have a balloon payment at the end of the loan term.
C) Amortized loan payments consist of interest only.
D) An amortized loan requires only one lump sum payment at the end of the loan term.
E) An amortized loan is a type of a pure discount loan.

Amortized Loans

Loans that are paid off over time through a series of fixed, regular payments where part of each payment covers the interest expense and the remaining amount reduces the principal balance.

Balloon Payment

A large, one-time payment made at the end of a loan term to pay off the remaining balance, typically used in mortgage or bond agreements.

Principal

The initial amount of money borrowed or invested, excluding any interest or dividends.