10-15Low Interest Mortgages Are Less Likely to Prepay If Market

question 18

Multiple Choice

10-15.Low interest mortgages are less likely to prepay if market interest rates have:

• A) risen
• B) fallen
• C) remained the same for a long period of time
• D) interest rates have no effect on prepayments

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Definitions:

Cost of Goods Manufactured

Total manufacturing costs incurred plus the beginning work-in-process inventory, minus the ending work-in-process inventory.

Adjusted Cost

The modification of the historical cost of an asset to reflect changes due to depreciation or amortization.

Goods Sold

The total quantity of products a company has sold during a particular period; it is closely related to "cost of goods sold" but focuses on the volume rather than the cost.

Work in Process

Inventory items that are partially completed, residing between raw material and finished goods stages in the production process.