Exam 8: Managing Interest Rate Risk Using Securitisation

With over $1200 billion in doubtful and troubled loans on their books in the early 2000s, _________ banks presented a huge potential market for the sale of distressed loans.

Which statement is not true with respect to loan sales?

Collateralised mortgage obligation (CMO) is a mortgage-backed bond issued in multiple classes or tranches.

Which of the following statements is false?

The credit rating agency is:

Benefits of securitisation include:

Burn-out factor is the aggregate percentage of the mortgage pool that:

The key feature of a loan assignment is that all rights are:

In Australia, a securitisation program must have:

Choose the correct answer:

Asset securitisation is the creation of securities based on a pool of underlying assets; and the value and income payments of the created securities are derived from the underlying assets.

Assumable mortgage is a mortgage contract that is:

Z class is:

Which of the following observations is not correct?

When current mortgage rates fall sufficiently low that the present value savings of refinancing outweigh the cost of prepayment penalties (and other fees and costs), the mortgage holders are said to have a valuable:

Besides reducing credit risks, an FI has an incentive to sell loans it originates for all of the following reasons except to:

Correspondent banking is a relationship between:

Pass-throughs, CMOs and mortgage-backed bonds have been used for:

Syndication is a relationship between a small bank and a large bank in which the large bank provides a number of deposit, lending and other services.

Collateralised debt obligation (CDO) is: