Which Is True

question 19

Multiple Choice

Which is true?

• A) the value of a pass-through is the sum of the component IO and PO
• B) if interest rates rise above the coupon rate prepayment will accelerate
• C) the acceleration of prepayment will reduce the value of the PO
• D) the increase in market rates reduces the discount rate used to value the PO cash flows

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Definitions:

Cash Income

Income received in the form of money as opposed to in-kind benefits or services, often considered for taxation and reporting purposes.

Official Poverty Line

A government-determined threshold of income used to measure and identify the population that lives in poverty, often adjusted for inflation and family size.

Department of Agriculture

A government agency responsible for developing and executing federal laws related to farming, forestry, rural economic development, and food.

Government Transfer Program

A system where the government redistributes income, often to support the poor, elderly, or unemployed, through benefits or subsidies.