Stripped mortgage-backed securities make maturity matching of bank assets and liabilities easier to accomplish than do most other investment securities that banks buy.

Question

Quizplus · Accepted Answer

Stripped mortgage-backed securities (MBS) separate the interest and principal payments into different streams, creating securities with very different cash flow characteristics and making it more challenging to match the maturity of assets and liabilities compared to more traditional investment securities.

Stripped Mortgage-Backed Securities Make Maturity Matching of Bank Assets and Liabilities