Which One of the Following Will Maximize the Value of an IO

question 44

Multiple Choice

Which one of the following will maximize the value of an IO strip?

• A)prepaying all mortgages in the underlying mortgage pool
• B)minimizing the duration of the underlying mortgage pool
• C)maximizing the value of the PO strip
• D)amortizing the bonds in the underlying pool faster than anticipated
• E)creating conditions where no prepayments occur in the underlying mortgage pool

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Dividends

Rephrased: Payments made by a corporation to its shareholders, usually as a distribution of profits.

Net Income

The concluding income of a company after removing the costs and taxes from its revenue.

Average Total Assets

The mean value of all the assets a company owns, calculated by adding the beginning and ending total asset balances during a period and dividing by two.

Earnings Activities

Activities that generate income for a business, including operations, sales, and investments.