Economists forecast that market yields are expected to fall as inflation expectations decline.

If Treasury yields decline, what would happen to MBS pass-through securities?

Group of answer choices

MBS prepayment speed would

[ Choose ] increase contraction risk price depreciation decrease price appreciation extension risk not enough information to answer

MBS duration would

[ Choose ] increase contraction risk price depreciation decrease price appreciation extension risk not enough information to answer

Price [_____] would be limited due to negative convexity.

[ Choose ] increase contraction risk price depreciation decrease price appreciation extension risk not enough information to answer

We call this [_____] risk.

[ Choose ] increase contraction risk price depreciation decrease price appreciation extension risk not enough information to answer