Securities that carry prepayment risk carry higher yields than securities without prepayment risk.

Name: Securities that carry prepayment risk carry higher yields than securities without prepayment risk.
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Securities with prepayment risk, such as mortgage-backed securities, typically offer higher yields to compensate investors for the additional risk associated with the possibility of the underlying loans being paid off earlier than expected, which can reduce the amount of interest investors receive.

Securities That Carry Prepayment Risk Carry Higher Yields Than Securities