n NISM Certifications
X NISM Series X
Medium

In the avalanche method of loan repayment, the loan paid off first is the one with the ______.

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Highest loan amount

  2. B

    Lowest loan amount

  3. Highest interest rate

    Correct answer

  4. D

    Lowest interest rate

Why this is the answer

The avalanche method prioritizes repayment of loans with the highest interest rates first to minimize the overall interest burden.

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