Products & RisksCâu 48 / 125
Prepayment risk in mortgage-backed securities means that:
a.The issuer will default on interest payments
b.The bonds cannot be sold before maturity
c.Interest rates will always rise
d.When interest rates fall, homeowners refinance and return principal sooner than expected
Giải thích
Prepayment risk arises because falling interest rates prompt homeowners to refinance, returning principal to investors earlier than expected. Investors then must reinvest that principal at the new, lower rates, which is a form of reinvestment risk specific to mortgage-backed securities.
Luyện miễn phí toàn bộ 125 câu hỏi — không cần đăng ký.
Câu hỏi liên quan cùng chủ đề
- A zero-coupon bond is purchased at a deep discount and:
- Which of the following bonds is generally most sensitive to a given change in interest rates?
- A mortgage-backed pass-through security, such as a GNMA (Ginnie Mae) certificate, passes through to investors:
- A warrant differs from a right in that a warrant:
- A money market instrument such as commercial paper is best described as:
- An investor sells 1 XYZ 30 put for a premium of 2. What is the maximum gain and the breakeven point?
Cập nhật gần nhất: · quy trình kiểm tra
Đội Ngũ Biên Tập PrepPass · Đối chiếu với FINRA Series 7 General Securities Representative Exam · Quy trình kiểm tra