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The uncertainty that the actual cash flows received by MBS investors will be different than the originally scheduled cash flows due to borrowers' ability to

The uncertainty that the actual cash flows received by MBS investors will be different than the originally scheduled cash flows due to borrowers' ability to repay/refinance mortgages early is called

A.

credit risk.

B.

interest rate risk.

C.

prepayment risk.

A business entity that exists for the purpose of purchasing mortgages and securitizing them is

A.

a mortgage finance company.

B.

a special purpose vehicle.

C.

a mortgage bond trustee.

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