What is defined as a larger, longer-term investment that is paid back at an agreed interest rate?

• A. Grant
• B. Mortgage
• C. Lease
• D. Subsidy

Answer: (B)

The correct choice is a mortgage, which is a specific type of loan usually used to purchase real estate. Mortgages involve borrowing a significant amount of money from a lender, which is then paid back over a long period, typically ranging from 15 to 30 years. The borrower agrees to pay back the loan amount along with interest, creating a structured repayment plan based on the terms set by the lender.

Mortgages are characterized by their larger sums and the fact that they are secured against the property itself, which means if the borrower fails to meet their repayment obligations, the lender has the right to take possession of the property through a legal process known as foreclosure. This long-term financial commitment allows individuals to invest in property without needing to pay the entire purchase price upfront.

In contrast, other options like grants and subsidies usually refer to funds provided without the expectation of repayment, typically for specific projects or purposes, such as education or economic development. A lease is an arrangement to use an asset (such as equipment or property) without transferring ownership, which involves regular payments over a shorter period, but unlike a mortgage, it doesn’t involve borrowing a lump sum to purchase the asset.