In Simple Terms, a Mortgage-Backed Security Is

question 17

Multiple Choice

In simple terms, a mortgage-backed security is:

• A)a portfolio of mortgages sold to investors through publicly issued bonds.
• B)a contract that transfers the ownership of a lender's mortgages receivable.
• C)a contract that transfers the risk of noncollection from mortgage originators to other investors.
• D)All of the above
• E)a and c only

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Definitions:

Volume Variance

The difference between the planned level of production volume and the actual production volume, often relating to overhead costs.

Predetermined Overhead Rate

The rate used to assign overhead costs to products or services based on a predetermined formula.

Fixed Component

The portion of total costs that remains constant, regardless of changes in activity level.

Variable Overhead

Costs of production that vary with the level of manufacturing activity or output, such as utilities and commissions, as opposed to fixed overhead costs.