Which of the Following Statements Regarding Mortgage-Backed Bonds Is Generally

question 2

Multiple Choice

Which of the following statements regarding mortgage-backed bonds is generally TRUE?

• A)The total value of the MBBs issued usually equals the value of the mortgages in the underlying pool
• B)Unlike corporate bonds,MBBs usually are issued with variable coupon rates of interest
• C)Overcollateralization of the mortgage pool assures investors that the income from the mortgage will be sufficient to pay the interest on bonds and the principal upon maturity
• D)All of the above

---

Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Indifference Map

A graphical representation in microeconomics, illustrating different bundles of goods between which a consumer is indifferent, showing preferences.

Total Utility

The overall satisfaction or benefit a consumer receives from consuming a specific quantity of a good or service.

Budget Line

A visual depiction showing every potential mix of two products that a specific income and price levels can buy.