18&21

Fixed Income: Mortgage Bonds Which of the following is TRUE? O MBS securities have A LOT of call risk, so when interest rates decline the MBS sector tends to perform WORSE than US Treasury bonds O MBS securities have a lot of default risk as most of this debt is NOT guaranteed o interest rates DECLINE for both MBS and Treasury bonds by the same amount and both have the same Initial time to maturity and interest rate/yield to maturity. then one would expect the mortgage bonds to have HIGHER return than the Treasury bonds Mortgage bonds (like mortgage backed securities (MBS) make up a very SMALL part of the US bond marker (