When Pricing Mortgage Pass-Through Securities, Issuers Use Each of the Following

question 14

Multiple Choice

When pricing mortgage pass-through securities, issuers use each of the following methods to include prepayment assumptions EXCEPT:

• A) FHA prepayment experiences
• B) The pool factor technique
• C) The PSA model
• D) Constant rates of prepayment

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Definitions:

Directed Effort

Focused work or activities aimed at achieving a specific goal or objective.

Goal

A specific, measurable, attainable, relevant, and time-bound objective that guides planning and effort in projects or endeavors.

Profit

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Stockholders

Individuals or entities that own shares in a corporation, giving them certain rights regarding the company's management and profits.