Mutual funds that invest in mortgage-backed pass-through securities are exposed to which of the following risks and costs?

Business

1 answer:

REY [17]3 years ago

7 0

Answer:

e. Prepayment risk

Explanation:

Prepayment risk is the likelihood of the firm where Special Purpose Vehicle that manages the mortgage-backed pass-through securities to repay the principal sum invested or part of it earlier than expected which then denies the investor of interest payments throughout the investment period.

When principals are repaid much earlier, the interest that could be earned on the principal is lost since the principal upon which the interest is to be computed has been repaid, hence, no more basis for the interest thereafter

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Answer: The Option "d.returning inventory that is defective or broken" is NOT an example of safeguarding inventory.

Explanation: If we analyze the statements:

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d.returning inventory that is defective or broken - Returning the defective inventory is a post-echo action that occurred due to the unprotection of the inventory, therefore it could not be referred to as an example of inventory protection.

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letter b, recording the transaction based on the information in a source document

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