Amortization is best described as which of the following, and how does it affect the principal and interest portions of payments over time?

• A. A schedule of equal principal payments with declining interest.
• B. Process of paying down principal over time; early payments are mostly interest, later more principal.
• C. The process of refinancing to lower the monthly payment.
• D. A lump-sum payoff at maturity.

Answer: (B)