By investing in mortgage loans, investors face:

Question

Quizplus · Accepted Answer

Investing in mortgage loans exposes investors to various risks including credit risk (the risk that borrowers will default on their mortgage payments), liquidity risk (the risk that the investment cannot be easily sold or converted into cash without significant loss), price risk (the risk that the value of the mortgage or the securities backed by mortgages will decrease), and prepayment risk (the risk that the mortgage will be paid off early, potentially at a time when reinvestment rates are lower).

By Investing in Mortgage Loans, Investors Face