A PO Is a "Principal Only" MBS and an IO

question 8

Multiple Choice

A PO is a "principal only" MBS and an IO is an "interest only" MBS. As prepayments increase which of the following happens.

• A) Both the PO and IO become more valuable
• B) The PO becomes more valuable and the IO becomes less valuable
• C) The PO becomes less valuable and the IO becomes more valuable
• D) Both the PO and IO become less valuable

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Definitions:

Direct Forcing

A method in numerical simulations that imposes certain conditions to directly manipulate the flow or mechanics of a system.

Force-Coercion Strategy

A method of change management where power, authority, or threats are used to achieve compliance or enforce change.

Unilateral Action

An action or decision made by one party or nation without the agreement or cooperation of others.

Shared Power Strategy

An approach in decision-making or governance where power and responsibilities are distributed among various stakeholders or groups, rather than centralized.