As Coupon Rates on New Mortgages Fall

question 40

Multiple Choice

As coupon rates on new mortgages fall:

• A)individuals are inclined to sell off their mortgages
• B)there is a decreased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates
• C)there is an increased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates
• D)there is no effect on mortgage payments

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