What is the primary risk facing the holder of a mortgage participation certificate?
A) The pool of mortgages is disbanded.
B) The homeowners may pay off their mortgages early.
C) The government will withdraw its guarantee of payment to the holder.
D) The rate of inflation will decrease substantially.

Question

Quizplus · Accepted Answer

The primary risk facing the holder of a mortgage participation certificate is that the homeowners may pay off their mortgages early. This can lead to a reduction in the cash flow generated by the certificate and potentially lower returns for the holder.

What Is the Primary Risk Facing the Holder of a Mortgage