Mortgage-Backed Bonds (MBB) Differ from Pass-Throughs and CMOs in Which

question 33

Multiple Choice

Mortgage-backed bonds (MBB) differ from pass-throughs and CMOs in which of the following ways?

• A)The MBB bondholders have a junior claim to assets of the FI.
• B)There is no direct link between the cash flow on the mortgages backing the bond and the interest and principal payments on the MBB.
• C)The assets backing a MBB issue are normally removed from the balance sheet of the FI.
• D)Tranches of a MBB are treated equally with respect to prepayments on mortgages backing the bond issue.
• E)None of these.

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Definitions:

Workers' Militancy

The readiness or tendency of workers and labor unions to engage in strikes, protests, or confrontational actions to assert rights and achieve labor objectives.

Tactical Skills

Refers to the practical expertise and procedures individuals use in situations to achieve specific objectives effectively and efficiently.

Federal Housing Administration

A United States government agency created to improve housing standards and conditions, and to provide an adequate home financing system through insurance of mortgages.

FHA

Stands for Federal Housing Administration, a United States government agency created in 1934 to improve housing standards and conditions, and to provide an adequate home financing system through insurance of mortgages.