How is securitization beneficial to investors?

1. By eliminating the cash flow timing of risks of MBS such as contraction and extension risk.
2. By providing investors access to a wider range of assets.
3. Reducing the inherent credit risk of pools of loans and receivables.

10) The creation of a bond classes with a waterfall structure for sharing losses is referred to as:

1. Credit Tranching
2. Time Tranching
3. Excess Reserves

11) How would this structure above best be described?

1. A pool of conforming mortgages as collateral.
2. Senior/Subordinated Structure.
3. All classes are guaranteed by a government-sponsored enterprise (GSE).