Which One of the Following Is Required for the Cash

question 3

Multiple Choice

Which one of the following is required for the cash flows on a PAC bond to be predictable?

• A)market interest rates must remain constant
• B)market interest rates must steadily decline
• C)mortgage prepayments must remain within the PAC collar
• D)PAC support bonds must be prepaid in a timely manner
• E)mortgage prepayments must exceed the specified PSA schedule

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Definitions:

Industry Demand

The total demand for all the products or services produced by a particular industry.

Positive Profits

Earnings that occur when a company's total revenues exceed its total costs, indicating financial gain from its operations.

Total Revenue

The overall amount of money generated by a business from the sale of its products or services, calculated by multiplying the price per unit by the number of units sold.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.