If interest rates decrease, the market value of a loan

If interest rates decrease, the market value of a loan previously make will increase.
True or False


Which of the following statements about the loan in the question above are TRUE?
(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


Which of the following is TRUE regarding the incremental cost of borrowing?
(A)   It should be less than the rate for a first mortgage
(B)   It should be compared to the cost of obtaining a second mortgage
(C)   It is used to calculate the APR for the loan
(D)   It is independent of loan-to-value ratio