26-27 Prepayment risk means that realized cash flows on pass-through securities may be more than expected cash flows.

Name: 26-27 Prepayment risk means that realized cash flows on pass-through securities may be more than expected cash flows.
Brand: Quizplus
Rating: 4.9 (38 reviews)

Question

Quizplus · Accepted Answer

Prepayment risk refers to the risk that the borrower will pay off their mortgage earlier than expected, leading to higher than anticipated cash flows for the holder of pass-through securities.

26-27 Prepayment Risk Means That Realized Cash Flows on Pass-Through