Flashcards
Week N Mortgage Backed Securities
Flashcards do conjunto (6)
- 1What is a Mortgage Backed Security (MBS)An asset/security backed by mortgages sold to investors
- 2Who is involved in a National Housing Association (NHA) MBS?CMHC/Administrator
Issuers/Banks/Loans Companies etc
Investors: Individuals/institutions - 3Difference between prepayable and non-prepayable?Prepayable: Prepayment passed onto investor
Non-prepayable: Yields lower than prepayable, because bank holds prepayment. - 4Calculating sale proceeds of MBSFace Value * RPB Factor * Market Price + Accrued interest
- 5Canadian Mortgage Bonds (CMB) are very different than MBS', with prepayment T/FFalse
Very similar, no prepayment - 6Why is prepayment bad?Investors put their money away to be invested, not paid back right away (aka. not earning)