11-17The Current Industry Standard for the Model of Expected Prepayments

question 13

Multiple Choice

11-17.The current industry standard for the model of expected prepayments is:

• A) the twelve-year prepaid life model
• B) the constant prepayment rate model
• C) the public securities association model
• D) the econometric prepayment model

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Definitions:

Direct Method

An accounting method used in the cash flow statement to show the specific sources of operating cash receipts and payments, contrasting with the indirect method.

Investing Activities

Transactions involving the purchase and sale of long-term assets and investments, a component of a company's cash flow statement.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company.

Direct Method

A cash flow statement preparation method that itemizes actual cash receipts and payments.