Which of the Following Statements About Mortgage-Backed Security Strips Is

question 56

Multiple Choice

Which of the following statements about mortgage-backed security strips is true?

• A)both interest-only and principal-only strips are subject to pre-payment risk
• B)only principal-only strips are subject to prepayment risk
• C)only interest-only strips are subject to prepayment risk
• D)the prepayment risk of interest-only and principal-only strips is precisely offsetting
• E)none of the above

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Definitions:

Merchandise Purchases

Transactions involving the buying of goods for resale, typically recorded as inventory in a business's accounting records.

Gross Profit

The difference between revenue and the cost of goods sold before deduction of overheads, payroll, taxation, and interest payments.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor.

Landscaping Supplies

Materials and products used in the creation and maintenance of landscaped areas, such as plants, soil, mulch, and tools.