Which of the Following Statements Regarding Mortgage-Backed Bonds Is Generally

question 33

Multiple Choice

Which of the following statements regarding mortgage-backed bonds is generally TRUE?

• A) The total value of the MBBs issued usually equals the value of the mortgages in the underlying pool
• B) Unlike corporate bonds, MBBs usually are issued with variable coupon rates of interest
• C) Overcollateralization of the mortgage pool assures investors that the income from mortgage will be sufficient to pay the interest on bonds and the principal upon maturity
• D) All of the above

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Definitions:

Asset Utilization Ratios

Ratios that measure how well a firm uses its assets to generate each $1 of sales.

Short-Term Assets

Assets that are expected to be converted into cash or used up within one year or within the business's operating cycle if longer than a year.

Quick Ratio

A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.