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Callable Bonds and Mortgage Backed Securities Both Have Prepayment Risk

question 66

True/False

Callable bonds and mortgage backed securities both have prepayment risk.


Definitions:

Chapter 11

A chapter of the U.S. Bankruptcy Code allowing a business to continue operations while reorganizing its debts under court supervision.

Creditors

Individuals or entities to whom money is owed by a debtor.

Court

A governmental institution that has the authority to adjudicate legal disputes between parties and administer justice in civil, criminal, and administrative matters.

Creditors' Committee

A group of representatives from a bankrupt company's unsecured creditors involved in the bankruptcy proceedings to protect their interests.

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