11-15.Which of the Following Is True

question 22

Multiple Choice

11-15.Which of the following is true?

• A) even a slight increase in the default rate of a sinking fund has a dramatic impact on its balance
• B) a large increase in the initial amount of over-collateralization has a minimal impact on the terminal fund balance
• C) an increase in the yield on a sinking fund has a negative effect on the fund balance
• D) the fund balance will rise with decreases in the PSA prepayment rate

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Definitions:

Independent Variable

A variable that is manipulated or changed in an experiment to see its effect on a dependent variable.

Coefficient of Correlation

A mathematical tool that quantifies the robustness and bearing of a linear association between two entities.

Variation

The degree to which values in a dataset vary from one another and from the dataset’s average.

Population Correlation

A measure of the strength and direction of a linear relationship between two quantitative variables across the entire population.