Analti_Calte

jmac01 Wrote:
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> 2. mbs are market-directional investment that
> should be avoided when one expect interest rates
> to __________.
>
> So, everyone says fall.
>
> But, when yields fall, the price increases but
> then levels off/falls due to the negative
> convexity. When yields rise, the price falls (but
> not as much as a corporate bond). So, is it
> really correct to say that you would avoid MBS if
> you expect rates to decrease? doesnt seem like
> you would buy them if rates were increasing.

If CFAI tells me my name is "Goat" then my name is indeed, Goat.

NO EXCUSES