If a Mortgage Pass-Through Experiences Smaller Prepayments Than Expected Early

question 48

Multiple Choice

If a mortgage pass-through experiences smaller prepayments than expected early on in the life of the security,the result will be that pass-through holders will receive ________ than expected cash flows early on and ________ than expected cash flows later on.

• A)greater; less
• B)greater; greater
• C)less; greater
• D)less; less
• E)less; no different

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Definitions:

Blank Slate

The theory that individuals are born without built-in mental content and that all knowledge comes from experience or perception.

Human Knowledge

The accumulated factual information, understanding, and skills that humans acquire through experience, education, and learning.

Locke And Hobbes

John Locke and Thomas Hobbes were influential English philosophers; Locke is known for his theories on natural rights and government by consent, while Hobbes is famous for his social contract theory and views on the nature of human beings.

Human Beings

Homo sapiens; the species of bipedal primates to which all modern human beings belong, characterized by their capacity for language, thought, and complex social structures.