For a Mortgage Pass-Through Security, Which of the Following Risks

question 20

Multiple Choice

For a mortgage pass-through security, which of the following risks most likely increases as interest rates decline?

• A) Balloon
• B) extension
• C) Contraction

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Definitions:

Investor's Return

The profit or loss made on an investment, usually expressed as a percentage of the initial investment.

Stock Price

The cost of purchasing a share of a company’s stock, which fluctuates based on market conditions, investor perceptions, and company performance.