Question 1

MBSs and other securitized pools are referred as pass-throughs because

Accepted Answer

A)  Cash flows from assets in the pool pass through to investors 
B)  Ownership of the assets passes through from the originator to the investor 
C)  Underlying loans can be prepaid at the discretion of the borrower 
D)  The underlying assets in the pool are amortized 
A)  Cash flows from assets in the pool pass through to investors 
B)  Ownership of the assets passes through from the originator to the investor 
C)  Underlying loans can be prepaid at the discretion of the borrower 
D)  The underlying assets in the pool are amortized A

Question 2

The first securitized pools were created from

Accepted Answer

A)  Commercial and industrial (business) loans 
B)  Mortgages 
C)  Credit card receivables 
D)  Motor vehicle loans 
A)  Commercial and industrial (business) loans 
B)  Mortgages 
C)  Credit card receivables 
D)  Motor vehicle loans B

Question 3

Private-label mortgage pools include

Accepted Answer

A)  Jumbo mortgages 
B)  Alt-A mortgages 
C)  Subprime mortgages 
D)  All of the above 
A)  Jumbo mortgages 
B)  Alt-A mortgages 
C)  Subprime mortgages 
D)  All of the above D

Question 4

Securitization involves

Accepted Answer

A)  The process of issuing stocks and bonds 
B)  Underwriting risky debt 
C)  The process of placing illiquid loans into a pool to create a relatively liquid security 
D)  Dealer financing of inventories of securities 
A)  The process of issuing stocks and bonds 
B)  Underwriting risky debt 
C)  The process of placing illiquid loans into a pool to create a relatively liquid security 
D)  Dealer financing of inventories of securities

Question 5

The financial crisis

Accepted Answer

A)  Set back Ginnie Mae securities 
B)  Set back Fannie Mae and Ginnie Mae securities 
C)  Set back private-label MBS 
D)  Gave the securitization process a much-needed boost 
A)  Set back Ginnie Mae securities 
B)  Set back Fannie Mae and Ginnie Mae securities 
C)  Set back private-label MBS 
D)  Gave the securitization process a much-needed boost

Question 6

Issuers of securitized assets add to the appeal to investors by

Accepted Answer

A)  Overcollateralizing the pool 
B)  Having private insurers insure the underlying assets in the pool 
C)  Having credit rating agencies assign a credit rating to the pool 
D)  All of the above 
A)  Overcollateralizing the pool 
B)  Having private insurers insure the underlying assets in the pool 
C)  Having credit rating agencies assign a credit rating to the pool 
D)  All of the above

Question 7

Securitization has

Accepted Answer

A)  Reduced the effectiveness of monetary policy 
B)  Reduced the efficiency of credit markets 
C)  Increased the integration of credit markets 
D)  Added to the cost of credit 
A)  Reduced the effectiveness of monetary policy 
B)  Reduced the efficiency of credit markets 
C)  Increased the integration of credit markets 
D)  Added to the cost of credit

Question 8

CMOs typically use mortgage-backed securities to

Accepted Answer

A)  Create separate securities having different maturities 
B)  Blend with junk bonds to reduce risk through diversification 
C)  Reduce the volatility of cash flows 
D)  Satisfy regulatory requirements 
A)  Create separate securities having different maturities 
B)  Blend with junk bonds to reduce risk through diversification 
C)  Reduce the volatility of cash flows 
D)  Satisfy regulatory requirements

Question 9

Collateralized loan obligations (CLOs) involve

Accepted Answer

A)  Motor vehicle loans 
B)  Commercial and industrial (business) loans 
C)  Mortgage loans 
D)  All of the above 
A)  Motor vehicle loans 
B)  Commercial and industrial (business) loans 
C)  Mortgage loans 
D)  All of the above

Question 10

Structured securities

Accepted Answer

A)  Are based on MBSs, ABSs, or CMBSs 
B)  Contain a residual or Z tranche 
C)  Parse the underlying cash flows into different securities 
D)  All of the above 
A)  Are based on MBSs, ABSs, or CMBSs 
B)  Contain a residual or Z tranche 
C)  Parse the underlying cash flows into different securities 
D)  All of the above

Question 11

Risks to investors in Ginnie Mae MBSs arise from

Accepted Answer

A)  Defaults of the underlying mortgages 
B)  Default by Ginnie Mae 
C)  Unpredictable cash flows from prepayments 
D)  Lack of collateralization 
A)  Defaults of the underlying mortgages 
B)  Default by Ginnie Mae 
C)  Unpredictable cash flows from prepayments 
D)  Lack of collateralization

Question 12

To address asymmetric information problems in pools of securitized loans

Accepted Answer

A)  Maximum loan-to-value ratios are used 
B)  Minimum credit scores are used 
C)  Loan originators are required to retain risk exposure to loans made 
D)  All of the above 
A)  Maximum loan-to-value ratios are used 
B)  Minimum credit scores are used 
C)  Loan originators are required to retain risk exposure to loans made 
D)  All of the above

MBSs and other securitized pools are referred as pass-throughs because

The first securitized pools were created from

Private-label mortgage pools include

Securitization involves

The financial crisis

Issuers of securitized assets add to the appeal to investors by

Securitization has

CMOs typically use mortgage-backed securities to

Collateralized loan obligations (CLOs) involve

Structured securities

Risks to investors in Ginnie Mae MBSs arise from

To address asymmetric information problems in pools of securitized loans

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters

Exam 9: Securitization

MBSs and other securitized pools are referred as pass-throughs because

The first securitized pools were created from

Private-label mortgage pools include

Securitization involves

The financial crisis

Issuers of securitized assets add to the appeal to investors by

Securitization has

CMOs typically use mortgage-backed securities to

Collateralized loan obligations (CLOs) involve

Structured securities

Risks to investors in Ginnie Mae MBSs arise from

To address asymmetric information problems in pools of securitized loans

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters