____ risk is the risk that a borrower may prepay the mortgage in response to a decline in interest rates.

Name: ____ risk is the risk that a borrower may prepay the mortgage in response to a decline in interest rates.
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Question

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Prepayment risk specifically refers to the risk associated with the possibility that a borrower will repay their loan before its maturity date, often occurring when interest rates fall and the borrower can refinance at a lower rate.

____ Risk Is the Risk That a Borrower May Prepay