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1. Mortgage-backed securities on FRMs (fixed-rate mtgs) from US dwelling owners are attractive to investors worldwide because they ____. a. yield higher interest rates than

1. Mortgage-backed securities on FRMs (fixed-rate mtgs) from US dwelling owners are attractive to investors worldwide because they ____.

a. yield higher interest rates than on other consumer debt

b. are secured with collateral that is usually worth more than the loan

c. are never called or prepaid when interest rates decline

d. yield returns that increase with inflation

2. Which of the following do you expect to have the highest interest-rate-risk premium?

a. 15-yr. FRM b. 15-yr. ARM c. 30-yr. FRM d. 30-yr. ARM

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