Question

which type of a line can model the graph of amount of an investment vs. payment number

A. linear

B. exponential

C. quadratic

D. can not be model

Answer 1

In the absence of any data, it is not possible to say anything about the model representing the relationship between investment and payment numbers.

In case of a fixed payment loan, if a part of the principal is added to the payment numbers, it is possible to eliminate a substantial number of payments over the life of the loan. On the other hand, a home mortgage loan is probably the cheapest source of borrowings, and the interest is usually deductible, which further decreases the effective borrowing cost. Thus, if there is a reasonable investment opportunity, it makes good sense to start making investments rather than making an accelerated loan payments. Thus, the decision depends on circumstances.

In the context of the question, with no data available, option D is the correct answer.