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Consider the following statements about mortgage and mortgage securities: Statement 1: Prepayments of mortgage generally increase as interest rates increase. Statement 2: Mortgage passthrough securities
Consider the following statements about mortgage and mortgage securities: Statement 1: "Prepayments of mortgage generally increase as interest rates increase." Statement 2: "Mortgage passthrough securities eliminate prepayment risk." Are the statements most likely correct or incorrect? A. Both statements are incorrect B. Statement 1 is incorrect, but Statement 2 is correct C. Statement 1 is correct, but Statement 2 is incorrect D. None of the above
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