26-76 a Claim to the Present Value of the Interest

question 107

Multiple Choice

26-76 A claim to the present value of the interest payments made by the mortgage holders in a GNMA pool is

• A)a CARS.
• B)an IO strip.
• C)a CARD.
• D)a PO strip.
• E)a prepayment claim.

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Definitions:

Corporate Dividend Payout

The portion of a company's earnings that is distributed to shareholders in the form of dividends.

Firm's Earnings

The net profit a company achieves in a given period, calculated as revenues minus costs and expenses before taxation.

Information Content Effect

A market phenomenon where stock prices adjust in response to the news contained in a company announcement, suggesting the news has value for investors’ decisions.

Dividend Payout

The segment of a company's income that is given to shareholders in dividends.