BUSI 422 Read & Interact Brueggeman & Fisher Chapter 19 solutions complete answers

BUSI 422 Read & Interact Brueggeman & Fisher Chapter 19 solutions complete answers

 

The   prepayment model combines both FHA experience and the constant rate of repayment approach.

 

All else equal, ______ in interest rates will lead to _____ in the price of a pass-through security.

 

Which type of risk is higher for ARMs and variable payment mortgages?

 

The ______ is the coupon rate of interest promised by the issuer of a pass-through security to an investor.

 

MBB credit ratings depend on all of the following EXCEPT:

 

Which of the following activities are assigned to Fannie Mae?

 

______ is a measure of the sensitivity of duration to changes in interest rates.

 

To provide a more accurate estimate of cash flows, issuers usually:

 

A security with no prepayment will be priced _______ than a security with 10% prepayment, all else equal.

 

Most constant prepayment rates tend to _____ prepayment in earlier years and ______ it in later years.

 

With mortgages, most borrowers _______.

 

The coupon rate on pass-throughs is _____ than the lowest rate of interest on any mortgage in the pool.

 

Which of the following is used to include prepayment assumptions when pricing securities. select all that apply.

 

GNMA pass-troughs contain mortgages backed by ________

 

Ginnie Mae pass-through securities are issued all of the following EXCEPT:

 

The majority of mortgages used in the pass-through security market are ___ interest loans secured by mortgages on ________.

 

True or false: All pass-through securities have the same underlying structure.

 

A bond that makes no interest payments is referred to as a:

 

True or false: Higher required rates of return result in lower bond prices.

 

Which of the following are most liquid?

 

Estimate the value of mortgages in a pool is also called _______ to market.

 

True or false: MBBs have credit ratings.

 

Three federally related institutions are ______.

 

FNMA's commitment program is divided into two parts:   and  

 

The primary function of the   mortgage market is to provide a mechanism to replenish funds used by mortgage originators

 

Ginnie Mae:

 

True or false: Freddie Mac purchases FHA-VA loans.

 

Select all the apply. The major types of mortgage-backed securities are:

 

True or false: Pass-through securities backed by FHA and VA mortgages were considered to be of similar risk to a government security.

 

Fannie Mae:

 

The secondary mortgage market _____.

 

The   mortgage market evolved due to a need to sell mortgages and facilitate a geographic 

 

The time lag between the time that the homeowners make their mortgage payments and the date that the servicing agent actually pays the investors is known as:

 

Select all that apply. For fixed interest rate mortgage pools, the impact of prepayment on cash flows will vary according to the:

 

The                prepayment model combines both FHA experience and the constant rate of repayment approach. (Use acronym only.)

 

When the market rate of return is equal to the coupon rate, a bond will sell at:

 

Fannie Mae was rechartered in 1954 to carryout the following activities. (Select all that apply.)

 

       describes the age, or number of years, that a loan has been outstanding before it is placed in a pool.

 

All else equal, a(n)         in interest rates will lead to a(n)        in the price of a pass-through security.

 

Select all that apply. Mortgage pools are usually grouped according to:

 

All else equal, the        (larger/smaller) the number of mortgages in a pool, the more predictable the monthly cash flow.

 

Which of the following was one of the early purchasers of mortgage loans?

 

FNMA and FHLMC securities contain mortgages backed by        . (Select all that apply.)

 

True or false: The pool factor is always less than or equal to one.

 

Select all that apply. GNMA guarantees the timely payment of principal and interest on securities back by pools of mortgages that are:

 

Ginnie Mae created to perform all of the following functions EXCEPT:

 

To reduce risk associated with issuing and purchasing mortgage-backed bonds, private originators:

 

Select all that apply. Fannie Mae does which of the following?

 

Which of the following factors influenced the evolution of the secondary mortgage market?

 

The expected yield at the time a mortgage pass-through security issued is likely to be         the coupon rate on the security at the time of issue.

 

Select all that apply: The Charter Act of 1954 did which of the following?

 

       are issued by a mortgage originator and represent an undivided interest in a pool of mortgages.

 

Freddie Mac was created to:

 

Select all that apply. The major types of mortgage-backed securities are:

 

The difference between the coupon rate on pass-throughs and the lowest rate of interest on any mortgage in the pool is known as the      .

 

FNMA”s commitment program is divided into two parts: mandatory and optional. Under the mandatory commitment option: Select all that apply.

 

True or false: Mortgages are prepaid when borrowers default.

 

A nuisance or cleanup call is used when the cost of servicing begins to become        relative to servicing income.

 

Select all that apply. The market value of a particular security depends on:

 

The FHA contributed to the development of the secondary mortgage market in which of the following ways? Select all that apply.

 

Marking a mortgage portfolio to market means:

 

As market interest rates change, the price of         will not reflect accelerated prepayment rates.

 

The primary function of the secondary mortgage market is:

 

The         is calculated as the average of the underlying mortgage interest rates weighted by the dollar balance of each mortgage as of security issue date.

 

Select all that apply. Freddie Mac does which of the following?

 

The average remaining term of the underlying mortgages as of the pass-through issue date, with the principal balance of the mortgage as the weighting factor is known as the:

 

The expected maturity period for pass-throughs is usually        to estimate relative to other investments because       .

 

If an investor is willing to pay a premium for a mortgage pass-through security it must reflect:

 

The stated maturity date of the pass-through pool is:

 

All of the following influence the pricing of mortgage pass-through securities EXCEPT:

 

The VA:

 

MBBs should be priced to provide        yields than MPTs

 

If the market value of mortgages in trust fall below the agreed-upon level of overcollateralization the issuer must:

 

FNMA’s commitment program is divided into two parts: mandatory and optional. Under the mandatory commitment option: Select all that apply.

 

True or false: Fannie Mae was converted over time to be a private firm rather than a government organization

 

The expected yield at the time a mortgage pass-through security is issued is likely to be        the coupon rate on the security at the time of issue.

 

Investors bear prepayment risk with        while issuers bear prepayment risk with       .

 

The weighted average coupon is:

 

Ginnie Mae was created to perform all of the following functions EXCEPT: