Fluctuations in the Timing of Cash-Flows Arising Out of an Underlying

question 25

Multiple Choice

Fluctuations in the timing of cash-flows arising out of an underlying pool of securitized assets is referred to as:

• A)income risk.
• B)prepayment risk.
• C)liquidity risk.
• D)capital risk.
• E)None of the options is correct.

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Definitions:

Capital Spending

Monies invested by an enterprise in obtaining or upgrading real assets, including estates, manufacturing facilities, or equipment.

Operating Cash Flow

The amount of cash generated by a company's regular business operations, indicating its ability to cover expenses, debt, and investments.

Shareholders' Equity

The net value of a company, calculated by subtracting total liabilities from total assets, which represents the owners' claim after debts have been settled.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from total revenue, also known as "net profit" or "net earnings."