- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 19. Mortgage-Backed Security (MBS) Instrument and Market Features
- Subject 5. Commercial Mortgage-Backed Securities
CFA Practice Question
The balloon risk is ______.
B. a type of contraction risk
C. the risk that the loan may extend in maturity
A. accompanied by a fully-amortizing loan
B. a type of contraction risk
C. the risk that the loan may extend in maturity
Correct Answer: C
A balloon payment is a type of loan that does not fully amortize over its term. It is a type of extension risk.
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