The Value of an IO Strip Will Most Likely Increase

question 13

Multiple Choice

The value of an IO strip will most likely increase when:

• A)the PSA schedule rate decreases from 200 to 10.
• B)market interest rates remain constant.
• C)prepayments increase.
• D)mortgage refinancing increases.
• E)market interest rates decrease significantly.

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Definitions:

Last 50 Years

A term referring to the most recent five decades, a period often analyzed for its significant historical, cultural, or technological changes.

Devolution

The transfer or delegation of power to a lower level, especially by a central government to local or regional administrations.

State Governments

The governing bodies of individual states within a federal system, which have powers to make and enforce laws within their jurisdictions under the U.S. Constitution.

Local Governments

Administrative bodies that govern smaller areas within a country, such as cities, towns, or counties, responsible for local services and regulations.