Final answer:
The TCJA allows mortgage interest deduction only on the first $750,000 of mortgage debt. Payments below the interest amount can cause debt to grow, and bond prices typically fall when interest rates rise.
Step-by-step explanation:
One significant change brought by the Tax Cuts and Jobs Act (TCJA) is that only the interest on the first $750,000 of mortgage debt is deductible. This means when calculating tax deductions on mortgage interest payments, homeowners can only consider the interest paid up to this amount of debt.
Taking into account the principles of mortgages and interest rates, it's clear that under certain circumstances, like when the interest on $20,000 is precisely $100, any payment amount less than $100 would not cover the accruing interest, resulting in the debt increasing over time rather than decreasing.
When interest rates change, it affects the bond market. For instance, if interest rates rise, the price of existing bonds with lower interest rates typically falls, since new bonds could be issued at the higher rate. While the exact answer to whether you'd pay more or less than $10,000 for the bond would depend on the specific conditions of the bond and the market, the general expectation is that bond prices move inversely to interest rate changes.