Answer any three of the following

Answers should be in the region of 500 words each.

1. Prepayment risk is one the key risk factors for Residential Mortgage-Backed Securities. How can changes in prepayment speed alter the cash flows observed from a RMBS pool and what implications may this have?

2. REITs should not use debt in their capital structure due to the tax transparency that they enjoy. Critically discuss this assertion.

3. You are a lender and a developer has approached you about funding a proposed 200,000 sq.ft office scheme in downtown Norfolk, VA. What key pieces of information would you require to help you make an informed decision?