Which of the Below Statements Is FALSE

question 28

Multiple Choice

Which of the below statements is FALSE?

• A) A stripped mortgage-backed security is created by distributing the principal and interest from a pool of underlying mortgages on an unequal basis to two classes of securityholders.
• B) A stripped mortgage-backed security is another example of a derivative mortgage security.
• C) Stripped mortgage-backed securities cannot be used to hedge a portfolio exposed to prepayment risk.
• D) There are two types of stripped mortgage-backed securities: partially stripped and IO/PO securities.

---

Definitions:

Mode of Shipment

The method or form of transporting goods from one place to another, including by sea, air, rail, or road.

Holding Cost

The expenses associated with storing inventory that is not being sold or used in the immediate future, including warehousing, insurance, and opportunity costs.

Shipping Option

Various methods and services provided by carriers for transporting goods from one location to another, differing in speed, cost, and handling requirements.

Factor Weighting Technique

A multi-criteria decision-making method that involves assigning different weights to various factors or attributes to rank or evaluate options.