Which of the Following Is TRUE Regarding the Incremental Cost

question 21

Multiple Choice

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 the loan-to-value ratio

---

Definitions:

Circular 230

Regulations promulgated by the United States Treasury Department governing practice before the Internal Revenue Service by attorneys, certified public accountants, and other professionals.

Civil Penalties

Fines or sanctions imposed by a government agency as punishment for violations of legal statutes or regulations.

Criminal Penalties

Legal sanctions imposed for violating tax laws, including fines or imprisonment.

Form 1040EZ

A simplified U.S. federal income tax form for single and joint filers with no dependents that was used to report taxable income under certain conditions, now discontinued.