Default risk is generally much greater for commercial mortgage loans than home loans because...

Q: A junk bond rating is BAA BBB and lower BB none of the above

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: Discusses price changes for interest rates on loans explain why this change may be taking place.

A: Interest rate are the percentage of the loan amount which the borrower needs to pay to the lender in…

Q: Explain Second Mortgages and Shorter Maturities?

A: It is a type of mortgage loan which is similar to a mortgage loan which is tenable by a borrower's…

Q: The advantage of a "balloon payment" loan over a conventional loan  repayment plan is:   A. less…

A: Balloon payment is referred as a large lump-sum payment, which is made at the end of the loan period…

Q: Explain Coupon Rates, Interest Rates, and Number of Seasoned Mortgages in Pools?

A: Coupon rate: The total yield annually from fixed-income security is called a coupon. And the rate at…

Q: Price of short-term bond are less volatile than long-term bonds. But yield to maturity of long-term…

A:

Q: Why doesn’t an issuer of an asset-backed security seek the highest credit rating of triple A?

A: Asset-backed securities (ABSs) are financial instruments that are supported by revenue assets…

Q: Explain Mortgage passthrough securities (MPTs)?

A: Answer: One form of mortgage backed securities is a pass through security. Mortgage securities allow…

Q: You have a choice among three types of loan (discount loan, interest - only loan, and amortized…

A: The objective of the question is to determine whether an amortized loan is the least expensive cost…

Q: It is often argued that debt becomes a more attractive mode of financing than equity as interest…

A: Debt refers to funds that are raised by an entity by generating outside liability for which entity…

Q: in layman's terms, what is the diff. between a mortgage backed security and a credit default swap?

A: The borrowings made for purchasing fixed-assets like land, property, home and apartments is…

Q: Explain Determinants of Mortgage Interest Rates?

A: Following are the determinants of Mortgage Interest Rates: Credit score: Banks and HFCs see the…

Q: Reinvest risk is lowest during a period of low interest rates. Also called clean loans. Is this true…

A: Clean Loan: It is a secured loan that one acquires from the bank either for personal use or business…

Q: When interest rates rise, bond refunding becomes quite popular. Select one: True O False

A: When interest rates rise, bond refunding becomes more popular among issuers. This is because issuers…

Q: interest rate risk differs between mortgage companies and other financial institutions

A: The mortgage company is a financial firm that gives out its own loans. They use their own funds or…

Q: S Throughout the process of originating and selling mortgages, mortgage companies face a number of…

A: Down payment is the percentage of the loan that is not paid off at the time of applying for a…

Q: The internal rate of return on a mortgage loan calculated from the lender's perspective is more…

A: Discount point is the amount or a part of mortgage amount which the borrower pay at the time of…

Q: BEST reason or reasons for use of commercial mortgage debt by investors: O Magnify equity returns &…

A: Commercial real estate (CRE) is property that generates income solely for business (rather than…

Q: Explain the influence of the pricing of a mortgage pass-through security?

A: The bond prices of a mortgage pass through security are influenced by: Change in interest rate:…

Q: Explain why it's possible for tranching to make invest ing in a mortgage -backed security more risky…

A: A mortgage-backed security is a type of security which is backed up by mortgage meaning failing to…

Q: 4. In the lending operations, how many types of loan security? Which one is most p

A: Solution: Introduction: In finance, a loan is a borrowing amount lending(given) by one or more…

Q: Generally speaking, short-term bonds have lower yields than long-term bonds. True False

A: Bonds are financial instruments representing debt obligations issued by various entities, including…

Q: 15. An interest-only loan is an example of a: partially-amortizing loan. fully-amortizing loan…

A: Amortization refers to the systematic repayment of loan which includes principal and interest…

Q: Banks can hedge the credit risk of their mortgage loans by buying credit default swaps. (Think about…

A: The risk or uncertainty that is present in an investment transaction that the investee will not…

Q: Explain Commercial Mortgage-Backed Securities (CMBSs)?

A: Commercial mortgage backed securities: These are fixed-income securities that are backed by…

Q: Explain how mortgage-backed securities, collateralised debt obligations and credit default swaps are…

A: Mortgage backed securities: Mortgage is a loan secured by some real estate property or commericial…

Q: Explain the Factors Important in Mortgage Loan Pricing?

A: Mortgage loan pricing: The process of analysis and arriving at the exact interest rate for a…

Q: Explain The Price Level Adjusted Mortgage (PLAM)?

A: Mortgage loan allows the buyer to pay some portion of amount in the beginning and pay the remaining…

Q: Why Would People Buy Credit Default Swaps?

A: Credit-default swaps can be defined as insurance against default risk. For instance, financial…

Q: Given a decrease in interest rates, Mortgage-Backed Securities (MBS) prepayments will be slower…

A: Mortgage-backed security refers to securitized bonds backed by different types of mortgages, and the…

Q: Which of the following statements about "alternative" sources of funds for commercial mortgages is…

A: The highly structured cash flow of commercial-backed securities is complex and servicers are needed…

Q: residential mortgages and those backed by commercial mortgages

A: It’s easy to work out that if you’re applying for a mortgage for your business, you must be applying…

Q: What is MOST TRUE of DEFAULT RISK on a mortgage loan? It is always lower with lower interest rates.…

A: Default risk is the risk that a lender assumes when a borrower fails to make mandatory debt…

Q: Interest costs for short-term debt are generally lower than interest costs for long-term debt…

A: Companies and people use debt to tide over liquidity problems or to get access to funds to buy…

Q: Collateralised mortgage obligations are mortgage pass-through securities Select one: A. with…

A: Collateralized Mortgage Obligations (CMOs) are being made as a bundle or a pool of mortgages which…

Q: Explain the reason why the wraparound lender should be willing to make the loan at a rate that is…

A: Wraparound mortgage is a type of secondary financing in which the seller extends an additional…

Q: ‘Debt finance is less expensive than equity finance’ Explain

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 19. When a lender offers a below-market interest rate in exchange for an equity position in the…

A: As per company policy it is only possible to solve one question. So solving question 19.

Q: Define the Convertible Mortgages with example?

A: A convertible mortgage is a loan which starts as an adjustable rate mortgage and can be changed into…

Q: A bank finds that its assets are not matched with its liabilities. It is taking floating rate…

A: A swap is a financial derivative arrangement in which two parties exchange the cash flows or…

Q: What is the major difference between CMOs and the other mortgage-backed securities?

A: Investment in securities are traded on Secondary Market where buyer and seller purchase or sale…

Q: Explain Hybrid and Mortgage REITs?

A: Introduction: REITs enables a corporation to buy a real estate property using the collective…

Q: Which of the following are reasons that the actual prepayment rate on a specific mortgage pool…

A: PSA (Public Securities Association Standard Prepayment Model) is referred to as an assumed monthly…

Q: Credit risk is a factor for commercial mortgage-backed securities because they are backed by…

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

Q: What is MOST TRUE of DEFAULT RISK on a mortgage loan? Group of answer choices It is always lower…

A: Mortgage loans are secured loan i.e., borrower raise funds for various purposes by promising…

Q: Explain Pricing Mortgage-Backed Bonds with example?

A: The question is based on the concept of mortgage backed bonds and pricing of these bonds. The…