You Own a Mortgage Passthrough

question 6

Multiple Choice

You own a mortgage passthrough. Which one of the following statements correctly describes the payments you will receive on that security?

• A)The payments will decrease at a constant rate over the life of the security.
• B)The payments will increase at a decreasing rate over the life of the security.
• C)The payments will be fixed for the life of the security.
• D)The payments will vary depending upon the amount paid on the underlying mortgages each period.
• E)The payments will decrease based on the interest shown on the amortization schedule.

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Definitions:

Property Taxes

Taxes levied on property owners by local governments based on the assessed value of their property, including land and buildings.

Laissez-Faire

A philosophy advocating minimal governmental intervention in the economy.

Economic Policy

This encompasses decisions by a government regarding its taxation, spending, and regulation practices to influence its country's economy.

Tax Reform Act

Legislation aimed at adjusting tax policies, which can include changes to tax rates, tax credits, and deductions to achieve economic or social objectives.