Which of the Following Best Explains the Term Burn-Out Factor

question 22

Multiple Choice

Which of the following best explains the term burn-out factor?

• A)The percent of mortgage contract that is transferred from the seller to the buyer of a house.
• B)The required interest spread of a pass-through security over a treasury when prepayment risk is taken into account.
• C)The aggregate percent of the mortgage pool that has been prepaid prior to the month under consideration.
• D)A mortgage-backed bond issued in multiple classes or tranches.

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Definitions:

Rate of Markdown

The percentage decrease from the original price of an item to its reduced price.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding the cost of goods sold.

Operating Profit

Earnings from a company's core business operations, excluding deductions of interest and taxes.

Trade Discount

A reduction in the retail price of goods, offered by wholesalers or manufacturers to retailers.