Study Session 16 - Cross-Reference to CFA Institute Assigned Reading #46 - Introductio to Asset-Backed Securities

Question 0

Extension risk

Answer 0

the risk that prepayment will be slower than expected

Question 1

Prepayment

Answer 1

A partial or full repayment of principal in excess of the scheduled principal repayment required by the mortgage

Question 2

contraction risk

Answer 2

the risk that prepayment will be more rapid

Question 3

The issuer of asset-backed securities is best described as the

Answer 3

SPV

Question 4

Balloon risk

Answer 4

is the possibility that a commercial mortgage borrower will not be able to refinance the proncipal that is due at the maturity date of the mortgage