The Stated Maturity of a Mortgage Pass-Through Security Is an Appropriate

question 16

True/False

The stated maturity of a mortgage pass-through security is an appropriate measure of the security's life because of prepayments.

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Definitions:

Equity Method

An accounting technique used for recording investments in which the investor has significant influence over the investee but does not have full control.

Significant Influence

A situation in which an investor has the power to participate in the financial and operating policy decisions of an investee, but not control over them.

Operating And Financial Policies

Operating and financial policies are the strategies and guidelines that a company follows in its daily activities and financial decision-making processes.

Return On Excess Cash

A measure of how effectively a company is using its idle cash, beyond what is needed for its immediate operating needs, to generate returns.