The Pass-Through Rate Is the Coupon Rate of Interest Promised

question 4

Multiple Choice

The pass-through rate is the coupon rate of interest promised by the issuer of a pass-through security to the investor.In most instances,the pass-through rate is:

• A)Equal to the average rate of interest on all mortgages in the underlying pool
• B)Lower than the lowest rate of interest on any mortgage in the underlying mortgage pool
• C)Higher than the highest rate of interest on any mortgage in the underlying mortgage pool
• D)None of the above

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