Which of the Following Is Not a Reasonable Expectation for Investors

question 54

Multiple Choice

Which of the following is not a reasonable expectation for investors in pass-through mortgage securities?

• A) The securities are readily marketable.
• B) They have little default risk.
• C) The investor receives cash flows in proportion to his/her ownership proportion.
• D) The timing of the cash flow return from the securities is quite predictable.
• E) All of the above are reasonable expectations for investors in pass-throughs.

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Definitions:

Free Trade

International exchange of goods permitted to operate freely, devoid of tariffs, quotas, or any form of restraint.

Low-Opportunity Cost Producer

A producer who can produce a good or service at a lower opportunity cost than competitors, enabling more efficient production and allocation of resources.

Joint Output

Joint output describes a situation where the production process results in two or more products being produced simultaneously from the same inputs.

Mutual Gains

Benefits that occur in a situation or transaction that are advantageous to all involved parties.