Which of the following is a risk of investing in mortgages?

Question

Quizplus · Accepted Answer

Investing in mortgages carries several risks, including default risk (the risk that the borrower will default on their loan and not repay the debt), prepayment risk (the risk that the borrower will repay the loan early, which can affect the expected returns for investors), and interest rate risk (the risk that changes in interest rates will affect the value of the mortgage-backed security). Therefore, all of the choices (A, B, and C) are correct.

Which of the Following Is a Risk of Investing in Mortgages