Explain the difference between an amortized loan and an interest-only loan.
a) Amortized loan gradually reduces the principal balance, while an interest-only loan requires only interest payments initially.
b) Amortized loan has fixed interest rates, while an interest-only loan has variable interest rates.
c) Amortized loan requires collateral, while an interest-only loan does not.
d) Amortized loan has shorter repayment periods compared to an interest-only loan.