Collateralized sortgage obligations and stripped mortgage-backed securities are
ID: 2802254 • Letter: C
Question
Collateralized sortgage obligations and stripped mortgage-backed securities are examples of A. eal estate market enhancenents B. C. derivative mortgage-backed securities. D. none of the above targeted securicies S The driving force in the development of a strong secondary mortgage market vas a finaneial innovation which A involved the packaging (or "pooiing) of mortgages involved the issuance of securicies collateralized by a pool of oregages c. is knovn as asset securitiza'ion. D all of the above 1b. The Federal National Hortgage Association, popularly known as Fannie Mae," was charged with the responsibility to create A. funding for home loans B. a liquid secondary market for RA-and VA-Insured Hortgages. c. to provide funding for single woman and vidows who wished to purchase homes, all of the above D. Investing in norcgages exposes the investor to A. price risk. B. default risk liquidity risk prepayment risk all of the above g. hen a mortgage is included in a pool of mortgages chat is used as collateral for a mortgage pass-through security, the sorcgage is said to be A. securitized standardized C. stripped D. Eully-funded 19. securitcy . The cash flow of a mortgage pas s-through security uotly date roinabie can be scheduled nuch like an anortized loan. B. C. depends on the cash flow of the underlying mortgages a11 nf the ahova About 98% of all pass-through securities are A. agency pass-through securities. B. private-label pass through securities. C. conventional pass-through securities. 2p . D. credit enhanced securities. aThe major type(s) of pass through security (securities) guaranteed by the federal agency (agencies) created by Congress to increase the supply of capital to the residential mortgage market and to provide support for an active secondary market is A. Ginnie Mae. B. Freddie Mac. C. Fannie Mae. D. all of the aboveExplanation / Answer
14. Collateralized mortgage obligations and stripped mortgage backed securities are examples of
C. derivative mortgage backed securities.
15. The driving force in the development of a strong secondary mortgage market was a financial innovation which involves the packaging of mortgages, issuing of securities collateralized by a pool of mortgages and is called as asset securatization.
Hence, the answer is D. All the above.
16. The Federal National Mortgage Association popularly known as Fannie Mae was charged with the responsibility to create a liquid secondary market for FMA and VA Insured Mortgages.
Hence, the answer is B.
17. Investing in mortgages exposes investor to Price Risk, Default Risk, Liquidity Risk and Prepayment Risk.
Hence, the answer is D. All the above.
18. When mortgage is included in pool of mortgages, that is used as collateral for a mortgage pass through security, then the mortgage is said to be Securitized.
Hence, the answer is A.
19. The cash flow of a mortgage pass through security is fully determinable, scheduled like an amortized loan since period payments take place and is dependant on cash flow of the underlying mortgage.
Hence, the answer is D. All the above.
20. About 98% of all pass through securities are agency pass through secriities. Only a few are others.
Hence, the answer is A.
21. The major type of pass through security guaranteed by the federal agency created by congress to increase the supply of capital to the residential mortgage market and to provide support for an active secondary market are Ginnie Mae, Freddie Mac and Fannie Mae.
Hence, the answer is D. All the above.