Assume that Jocelyn is comparing two fixed-rate loan options, a 15 year and a 30 year mortgage. Both options have the same interest rate and amount borrowed. The 30 year, when compared to the 15 year loan will have a 1)_____________ monthly payment and a 2)___________ total cost when repayment is completed.

a. Higher, Higher
b. Higher, Lower
c. Lower, Higher
d. Lower, Lower
I picked c

To determine whether your answer choice is correct, let's break down the two options:

1) Monthly Payment:
With a 15-year mortgage, the repayment period is shorter than with a 30-year mortgage. As a result, the monthly payments for the 15-year mortgage will be higher. This is because the amount borrowed has to be repaid over a smaller number of months, which increases the monthly payment amount.

2) Total Cost:
The total cost of a loan includes the principal (amount borrowed) and the interest paid over the life of the loan. In this case, since both loan options have the same interest rate and amount borrowed, the 15-year mortgage will have a lower total cost compared to the 30-year mortgage. This is because the 15-year mortgage has a shorter repayment period, so less time is given for interest to accumulate, resulting in a lower total cost.

Now let's match these findings to the answer choices:
a. Higher, Higher
b. Higher, Lower
c. Lower, Higher (your choice)
d. Lower, Lower

Based on the explanations provided, the correct answer is indeed c. The 30-year mortgage will have a lower monthly payment but a higher total cost when repayment is completed compared to the 15-year mortgage.

My answer is b.