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LOS e, (Part 1): Describe the types and characteristics of mortgage-backed securities.
Q1. Which of the following is least likely a cash flow that results from a mortgage-backed security?
A) Prepayments.
B) Net interest.
C) Mortgage processing fees and charges.
Q2. Which of the following is the least significant risk faced by a holder of a mortgage-backed security?
A) Reinvestment risk.
B) Interest rate risk.
C) Scheduled principal payment risk.
Q3. Paul Blackburn is describing mortgage backed securities and makes the following statements:
Statement 1: A mortgage passthrough security is formed by pooling a large number of mortgages and issuing certificates that represent ownership shares in the pool. Because each mortgage borrower has the right to prepay the mortgage, the value of a passthrough security behaves as if the security has an embedded put feature.
Statement 2: A collateralized mortgage obligation with sequential tranches is created by pooling mortgage passthrough certificates. Securities are issued in different tranches that have proportionate claims on the cash flows from the passthrough certificates.
With regards to Blackburn’s statements:
A) both are correct.
B) only one is correct.
C) both are incorrect.
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发表于 2009-3-2 16:26
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