Why Are the Regular GNMA Pass-Through Not Very Attractive to Insurance

question 91

Multiple Choice

Why are the regular GNMA pass-through not very attractive to insurance companies and pension funds seeking long-term duration assets to match their long-term duration liabilities?

• A)Because of their short expected duration.
• B)Because these bonds have the shortest average life with a maximum of prepayment protection.
• C)Because they are zero coupon bonds and hence carry maximum amount of risk.
• D)Because of their failures to offer prepayment protection.

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Definitions:

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Inborn traits that influence how individuals respond emotionally and behaviorally to the environment.

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The unique combination of emotional, attitudinal, and behavioral response patterns of an individual.

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A state of heightened physiological and psychological activity, including increased heart rate, alertness, and readiness to respond.

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