If Interest Rates Increase, an Investor Who Owns a Mortgage

question 24

Multiple Choice

If interest rates increase, an investor who owns a mortgage pass-through security is most likely affected by:

• A) credit risk.
• B) extension risk.
• C) contraction risk.

---

Definitions:

Cerebrum

The largest part of the brain, responsible for various higher functions such as thought, action, memory, and emotion.

Brain Region

A specific area within the brain responsible for certain functions or processes, such as the occipital lobe's role in visual processing.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for executive functions, such as judgment, problem-solving, and planning.

Infancy

A developmental period in humans from birth to approximately 24 months of age, characterized by rapid growth and significant milestones in physical, cognitive, and socioemotional development.