Question 1

Creating mortgage-backed pass-through securities:

Accepted Answer

A)  can largely resolve the duration and illiquidity risk problems for a FI. 
B)  would not have any effect on the duration and illiquidity risk problems for a FI. 
C)  can worsen the duration and illiquidity risk problems for a FI. 
D)  None of the listed options are correct. 
A)  can largely resolve the duration and illiquidity risk problems for a FI. 
B)  would not have any effect on the duration and illiquidity risk problems for a FI. 
C)  can worsen the duration and illiquidity risk problems for a FI. 
D)  None of the listed options are correct.

Question 2

As coupon rates on new mortgages fall:

Accepted Answer

A)  individuals are inclined to sell off their mortgages. 
B)  there is a decreased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates. 
C)  there is an increased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates. 
D)  there is no effect on mortgage payments. 
A)  individuals are inclined to sell off their mortgages. 
B)  there is a decreased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates. 
C)  there is an increased incentive for individuals in the pool to pay off old, high-cost mortgages and refinance at lower rates. 
D)  there is no effect on mortgage payments.

Question 3

Pass-throughs, CMOs and mortgage-backed bonds have been used for:

Accepted Answer

A)  car loans. 
B)  credit card receivables. 
C)  commercial and industrial loans. 
D)  All of the listed options are correct. 
A)  car loans. 
B)  credit card receivables. 
C)  commercial and industrial loans. 
D)  All of the listed options are correct.

Question 4

Asset securitisation is where:

Accepted Answer

A)  existing securities are sold to create a pool of funds for investment in income assets. 
B)  securities are created based on house loans and income payments from the house owners are then paid to the investors. 
C)  securities are created based on a pool of underlying assets and the value and income payments of the securities are derived from the underlying assets. 
D)  All of the listed options are correct. 
A)  existing securities are sold to create a pool of funds for investment in income assets. 
B)  securities are created based on house loans and income payments from the house owners are then paid to the investors. 
C)  securities are created based on a pool of underlying assets and the value and income payments of the securities are derived from the underlying assets. 
D)  All of the listed options are correct.

Question 5

When a Special Purpose Vehicle (SPV) creates asset-backed securities, the SPV retains ownership of the original assets.

Accepted Answer

A) True 
 B)False

Creating mortgage-backed pass-through securities:

As coupon rates on new mortgages fall:

Pass-throughs, CMOs and mortgage-backed bonds have been used for:

Asset securitisation is where:

When a Special Purpose Vehicle (SPV) creates asset-backed securities, the SPV retains ownership of the original assets.

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 8: Credit Risk I: Individual Loan Risk

Creating mortgage-backed pass-through securities:

As coupon rates on new mortgages fall:

Pass-throughs, CMOs and mortgage-backed bonds have been used for:

Asset securitisation is where:

When a Special Purpose Vehicle (SPV) creates asset-backed securities, the SPV retains ownership of the original assets.

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters