Multiple Choice
Which of the following statements concerning a 30 year,$150,000 loan at 7% with monthly payments is true,if 15 years later,an investor wants to purchase the loan and market interest rates are 5%?
A) The market value of the loan is higher than the book value of the loan because the market rate of interest is lower than the interest rate on the loan
B) The market value of the loan is lower than the book value of the loan because the market rate of interest is lower than the interest rate on the loan
C) The market value of the loan is higher than the book value of the loan because the market rate of interest is higher than the interest rate on the loan
D) The market value of the loan is lower than the book value of the loan because the market rate of interest is higher than the interest rate on the loan
Correct Answer:
Verified
Correct Answer:
Verified
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