Which One of the Following Correctly Applies to a Mortgage

question 49

Multiple Choice

Which one of the following correctly applies to a mortgage passthrough bond?

• A)The primary collateral for the bond is the underlying pool of mortgages.
• B)All interest received is immediately passed through while principal payments are held until the bond matures.
• C)Each bond represents one home mortgage.
• D)These bonds are created via a process known as mortgage collaring.
• E)All of these bonds are guaranteed by the full faith and credit of the U.S. government.

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Definitions:

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not affect future decision-making but often do.

Faulty Hindsight

The misjudgment of the reasons behind past decisions based on the outcome rather than on the information available at the time.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business or personal decisions.

Escalated Commitment

A pattern of behavior in which an individual or group continues to rationalize their decisions, invest additional resources, and follow a failing course of action.