A bank has purchased a significant amount of loan receivables of another bank. The loan portfolio is made up of several home mortgages, making it essentially a mortgage-backed security. The investing bank has created its cashflow forecast from the receivable but faces the risk that if interest rates decline, principal payments will be made earlier and that interest collections will not happen. What risk does the bank face?* A.)Mortgage Default Risk B.) Mortgage Prepayment Risk C.) Mortgage Settlement Risk D.) Mortgage Extension Risk
1.) A bank has purchased a significant amount of loan receivables of another bank. The loan portfolio is made up of several home mortgages, making it essentially a mortgage-backed security. The investing bank has created its cashflow
A.)Mortgage Default Risk
B.) Mortgage Prepayment Risk
C.) Mortgage Settlement Risk
D.) Mortgage Extension Risk
2.) The mortgage contract states that the debtor must pay a minimum of P100,000 per year on the 7% interest, P1,000,000 loan. The balance would be due by the end of the tenth year as a lump sum.
A.) Balloon payment mortgage
B.) Rollover mortgage
C.) Home equity loans
D.) Construction to permanent mortgages
3.) Which of the following would have inflationary effect on the economy? [1] BSP releasing new bonds in the market [2] BSP decreasing the repo rate [3] BSP increasing the bank rate. *
A.) 1 only
B.) 2 only
C.) 1 and 2
D.) 2 and 3
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