CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Which of the following statements is the LEAST accurate with respect to the various forms of mortgage-backed securities?
A. Agency securities only use conforming mortgages.
B. Nonagency mortgage passthrough securities are usually issued by commercial banks. They use nonconforming mortgages as collateral.
C. Size is not a criteria for making a mortgage conforming.
Explanation: The size of a mortgage is a criteria for making the mortgage conforming. In particular. Only loans up to a certain size may be included in conforming pools.

User Contributed Comments 3

User Comment
rhardin So nonagencies use only nonconforming mortgages and agencies use only conforming? That sounds backwards to me. Can someone explain how this is the case? Thanks!
tim2 seems ok, see wikipedia for "non conforming mortage"
ars2011 agencies will only back securities which meet some underwriting standards which is the case only with conforming mortgages
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