When Pricing Mortgage Pass-Through Securities,issuers Use All of the Following

question 16

Multiple Choice

When pricing mortgage pass-through securities,issuers use all of the following methods to include prepayment assumptions except:

• A) FHA prepayment experiences.
• B) thepool factor technique.
• C) thePSA model.
• D) constant rates of prepayment.

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Definitions:

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a reflexive response without prior learning.

Unconditioned Response

is an automatic, natural reaction to a stimulus that occurs without the need for prior learning or conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually comes to trigger a conditioned response.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention, until it becomes associated with an unconditioned stimulus through classical conditioning.