Credit risk is a factor for commercial mortgage-backed securities because they are backed by mortgageloans that:А.are non-recourse.В.have limited call protection.C.have no prepayment penalty points.

Option A. Non Recourse Commercial Mortgage backed securities are securities whose payoff depends on…

Credit risk is a factor for commercial mortgage-backed securities because they are backed by mortgage loans that: A. are non-recourse. В. have limited call protection. C. have no prepayment penalty points.

Credit risk is a factor for commercial mortgage-backed securities because they are backed by mortgage loans that: A. are non-recourse. В. have limited call protection. C. have no prepayment penalty points.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

F2
When the total cost of borrowing is less than the bond interest paid, Select answer from the options below the bonds were sold at a discount. the issuing company is likely in poor financial health. the lender is likely to give the issuing company a discount. the bonds were sold above face value.
What is MOST TRUE of DEFAULT RISK on a mortgage loan? Group of answer choices It is always lower with lower interest rates. It increases with greater leverage. It increases with a lock-out provision. It does not effect the borrower due to lack of recourse.
2 of Banks tend to never deduct interest at any other time than at the END of the loan. Select one: True False
The use of warrants lowers the coupon rate on the corresponding debt issue. Doesthis mean that the component cost of a debt-plus-warrants package is less than thecost of straight debt? Explain.
How did mark-to-market (MTM) accounting factor into the credit crisis? CDS's were undervalued MBS's were overvalued subprime loans were undervalued CDS's were overvalued MBS's were undervalued
In the run-up to the 2007 – 2009 financial crises, all of these key trends undermined the health of the mortgage (and other) securitization markets except: Group of answer choices D. Banks failing to distribute securitized risk A. Risk-based pricing C. Subprime credit wrapped into complex and overvalued securities B. Subprime loans
Assume you are lending money to company X. A credit default swap (CDS) consists of an agreement by a third party to pay the lost principal and interest of a loan to you (the CDS buyer) if a borrower defaults on a loan. Which of the following is false? O A. A Swap completely solves the problem that company X might default OB. A Swap solves the default problem from Company X on the condition that the third party (CDS provider) will not default. O C. When financial crisis happens, the CDS seller may have to pay recovery to many CDS buyers, and then the CDS seller could default. O D. B and C are part of the reasons for 2008 Global financial crisis.
Compare a CMO with A, B, Z to a CMO that has the same tranches but is backed by a larger pool of mortgages (and therefore has a residual). In a CMO with a residual: Tranche A has a shorter duration and less inflation/interest rate risk Tranche 8 has a shorter duration and more inflation/interest rate risk Tranche B has a longer duration and more inflation/interest rate risk Tranche Z has more inflation/interest rate risk Tranche Z has less inflation/interest rate risk
An advantage of bonds is O Bonds do not affect owner control O Bonds require payment of par value at maturity O Bond payments can be burdensome when income and cash flow are low O Bonds can decrease return on equity
Physical settlement of a credit default swap avoids the need to determine the termination value of the reference asset. True False
Financial assets such as mortgages, credit cardreceivables, and auto loan receivables are oftenbundled up, placed in a bank trust department,and then used as collateral for publicly tradedbonds. Bond prices typically rise when interestrates decline, but bonds backed by mortgagesfrequently fall when rates decline. Why might thishappen?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS