17.

When interest rates fall, a fixed interest rate mortgage lender will experience the following except

Select one:

a. the value of fixed mortgages will increase as a result of the fall in interest rate.

b. the value of the fixed mortgages will decline as a result of the fall in interest rate.

c. the mortgages may be repaid earlier and the lender may have to reinvest the proceeds at a much lower rare.

d. a negative cash flow may result if long-term mortgages are funded with short-term deposits.

18.

Mortgages are

Select one:

a. loans made to individuals or businesses secured by real estate.

b. securities backed by financial assets.

c. bonds issued by corporations and government.

d. long-term loans to finance business operations.

19.

Mortgages are ____ to the issuer (borrower) and ____ to the holder (lender).

Select one:

a. assets, liabilities

b. collateral, investment

c. investment, collateral

d. liabilities, assets

20.

____ risk is the risk that interest rates rise and the value of long term mortgages decline.

Select one:

a. Interest rate

b. None of the above

c. Default

d. Prepayment

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Please answer ALL correctly!

I will THUMB UP :)