1.) Which of the following is true about pass-through securities?

a. They have one class of investors

b. All investors receive scheduled interest and principal payment; some (but not all) also receive unscheduled principal

c. They are written on loans that are currently on a banks balance sheet

d. Investor cash flows are the same dollar amount every month

2. Which of the following is NOT a component of a debt securitys interest rate?

a. Liquidity premium

b. Special Provisions Risk Premium

c. Market Risk Premium

d. Foreign Exchange Premium

3. Which of the following is NOT true about derivatives?

a. Derivatives are exclusively exchange-traded

b. Derivatives are securities whose payoff is linked to another, previously-issued security

c. Derivatives can assist in hedging risk

d. Derivatives can involve significant counterparty risk