QUESTION 18
Statement 1: Weighted average coupon rate is the coined term for the stated rate of this type of securities.
Statement 2: Prepayment speed of the pool of residential mortgages has a monthly and annualized measurement. Conditional prepayment rate is the annualized measure while the unconditional prepayment rate is the monthly measure.
Statement 3: The classification of mortgage between conforming and nonconforming depends on whether it satisfied underlying standards of government agencies issuing mortgaged backed securities.
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a. |
0 |
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b. |
1 |
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c. |
2 |
Statement 1 is correct. Weighted average coupon rate is used to express the rate for these type of securities
Statement 2 is incorrect. Prepayment speed has a annualized measurement, and not a monthly measurement. Conditional prepayment rate is the annualized measure, and this part of the statement is correct. However, the second part of the statement regarding unconditional prepayment rate is incorrect
Statement 3 is correct. A conforming mortgage is one which meets the criteria laid down by Fannie Mae or Freddie Mac. A non-conforming loan does not meet the criteria, and cannot be sold to government agencies
the answer is (b) - only one statement is false
QUESTION 18 How many of the following statements regarding mortgage pass-through securities are false? Statement 1:...
QUESTION 20 Determine whether each of the following statements regarding securities are true or false: Statement 1: Mutual funds are usually organized as limited partnerships. Statement 2: Asset-backed securities pool different assets including cash from various investors to create a portfolio of securities. Statement 3: ETFs and ETNs are open-ended funds that investors can trade among themselves in secondary markets. a. True, false, true b. False, true, true c. False, false, true