The Value of an IO Strip Will Most Likely Increase

question 54

Multiple Choice

The value of an IO strip will most likely increase when:

• A) the PSA schedule rate decreases from 200 to 100.
• B) market interest rates remain constant.
• C) prepayments increase.
• D) mortgage refinancings increase.
• E) market interest rates decrease significantly.

---

Definitions:

Enforceable

Capable of being imposed or executed in accordance with the law.

Bilateral Contract

An agreement featuring mutual obligations, where each party promises to perform an act in exchange for the other party's act.

Self-Service Gas Station

A fuel station where customers pump their own gasoline instead of being assisted by an attendant.

Equitable Remedies

Court orders that require specific actions by a party, focusing on fairness and used when financial compensation isn't appropriate to resolve injustice.