CFA Practice Question

There are 490 practice questions for this study session.

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
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