Exam 4: Introduction to Asset-Backed Securities

In the context of mortgage-backed securities, a conditional prepayment rate (CPr) of 8% means that approximately 8% of the outstanding mortgage pool balance at the beginning Of the year is expected to be prepaid:

a goal of securitization is to:

In a securitization, the special purpose entity (SPe) is responsible for the:

Which of the following statements related to securitization is correct?

Which of the following characteristics of a residential mortgage loan would best protect the lender from a strategic default by the borrower?

Securitization benefits investors by:

The tranches in a collateralized mortgage obligation (CMo) that are most likely to provide protection for investors against both extension and contraction risk are:

Collateralized mortgage obligations (CMos) are designed to:

The longest-term tranche of a sequential-pay CMo is most likely to have the lowest:

In credit card receivable aBS, principal cash flows can be altered only when the:

Which commercial mortgage-backed security (CMBS) characteristic causes a CMBS to trade more like a corporate bond than a residential mortgage-backed security (rMBS)?

In a securitization, the collateral is initially sold by the:

Credit risk is an important consideration for commercial mortgage-backed securities (CMBS) if the CMBS are backed by mortgage loans that:

Which type of asset-backed security is not affected by prepayment risk?

Which of the following is most likely an advantage of collateralized mortgage obligations (CMos)? CMos can

Which of the following describes a typical feature of a non-agency residential mort- gage-backed security (rMBS)?

a benefit of securitization is the:

If a mortgage borrower makes prepayments without penalty to take advantage of falling interest rates, the lender will most likely experience:

If a default occurs in a non-recourse commercial mortgage-backed security (CMBS), the lender will most likely:

For a mortgage pass-through security, which of the following risks most likely increases as interest rates decline?