Exam 21: Mortgage-Backed Securities

If the prepayment schedule for a mortgage pool increases from 50 PSA to 100 PSA, the related interest-only strips will ________ in value and the related principal-only strips will ________ in value.

What is the monthly mortgage payment on a $225,000, 25-year loan if the interest rate is 4.50%?

The average time for a mortgage in a pool to be paid off is referred to as which one of the following?

Which one of the following is NOT a reason why mortgage prepayments occur?

Generally, the average life of a mortgage is ________ the mortgage's stated maturity.

Which one of the following statements correctly relates to reverse mortgages?

Four years ago, you borrowed $250,000 for 20 years at 8%. Payments are made monthly. How much interest have you paid thus far?

Monthly payments to investors in GNMA mortgage-backed bonds include which of the following cash flows? I. mortgage interest II. fixed principal payments III. scheduled amortization of mortgage principal IV. mortgage principal prepayments

Which one of the following is the risk associated with receiving a mortgage bond's principal payments sooner than anticipated?

Which one of the following statements regarding an original issue $25,000 GNMA bond is correct?

When can a homeowner prepay on his or her home mortgage?

Which one of the following is a measure of interest rate risk for fixed-income securities?

You make monthly payments on a 20-year fixed rate mortgage for $275,000 at 4%. How much interest will you have paid after 10 years?

You just took out a 30-year mortgage for $325,000 at 5% interest. How much of the first monthly payment will be applied to the principal balance?

You are borrowing $245,000 for 20 years at 4.375%, with monthly payments. What is the total amount of interest you will pay if you pay the loan as agreed over the 20 years?

Mortgage prepayments are generally a(n)________ to the mortgage borrower and a(n)________ to the mortgage investor.

Historically, what has been the relationship between bond prepayment rates and the market rate of interest?

The ________ duration for mortgage-backed securities is the duration measure that accounts for how mortgage prepayments are affected by changes in interest rates.

Sam took out a 30-year, $450,000, 4.125% loan 10 years ago. What is Sam's current principal balance, assuming that he makes monthly payments?

A borrower must pay which one of the following in order to pay off their home mortgage?