CFA Practice Question

CFA Practice Question

Which of the following is most likely incorrect?
A. Mortgage pass through securities are created by pooling mortgages and selling shares or certificates in the pool.
B. Fannie Mae and Freddie Mac provide credit and support for the housing sector by issuing securities that are backed by the mortgage loans that they purchase.
C. The monthly cash flows for mortgage pass through securities include net interest, and scheduled principal payments. Any principal prepayments are added to the pool and distributed at maturity.
Explanation: The monthly cash flows for mortgage pass through securities only include net interest, scheduled principal payments and any principal prepayments.

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