- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 19. Mortgage-Backed Security (MBS) Instrument and Market Features
- Subject 3. Residential Mortgage-Backed Securities
CFA Practice Question
The spread between the yields on a Ginnie Mae pass-through security and a comparable Treasury security is best explained by ______.
A. credit risk
B. prepayment risk
C. reinvestment risk
Correct Answer: B
Mortgage-backed securities expose an investor to prepayment risk.
User Contributed Comments 3
| User | Comment |
|---|---|
| gomez1234 | how about credit risk? are they considered equal? i hope not :) |
| CJHughes | GNMA backed by the US Gov. Same ultimate credit risk guaranteed. |
| Rohule | does reinvestment and prepayment risk are corelated ? thanks |