In periods of inflation, the coupon rate remains unchanged IV. Ginnie Mae stock is traded on the New York Stock Exchange Each receipt is, essentially, a zero-coupon obligation, that is purchased at a discount, and which is redeemable at par at a pre-set date. 26 weeks A. It gets no payments until all prior tranches are retired. Treasury NoteC. IV. I Trades bypass the floor broker II Trades can be effected more efficiently and at lower cost III Orders can be accepted up to certain size limits IV Orders can be executed at faster speed I, II, III, and IV C. $162.50 $4,906.25 Payments to holders of Ginnie Mae pass-through certificates: Of the choices listed, Treasury Bonds have the longest maturity. expected life of the trancheC. Its price moves just like a conventional long term deep discount bond. A. b. they are "packaged" by broker-dealers Freddie Mac debt issues are directly guaranteed by the U.S. Government loan to value ratio. These are also not a derivative product. lower extension riskC. Treasury bondB. Browse over 1 million classes created by top students, professors, publishers, and experts. c. semi-annually A. credit risk Primary dealers are expected to bid in weekly Treasury auctions, and must make a secondary market in all U.S. Government issues. This is true because when the certificate was purchased, assume that the expected life of the underlying 15 year pool (for example) was 12 years. a. reduce prepayment risk to holders of that tranche I. III. II and IIID. Domestic broker-dealers III. This "prepayment speed assumption" is used to "guesstimate" the expected life of a mortgage backed pass-through certificate. It acts like a long-term zero-coupon bond, so it is most susceptible to interest rate risk. On the other hand, if market interest rates rise, homeowners stay in their existing homes longer than expected and the rate of expected principal repayments slows, extending the maturity of the tranches. C. When interest rates rise, the interest rate on the tranche falls The bonds with the highest credit risk are Industrial revenue bonds and Equipment trust certificates. I. coupon rate is adjusted to 9% I. IV. I PACs are similar to TACs in that both provide call protection against increasing prepayment speedsII PACs differ from TACs in that TACs do not offer protection against a decrease in prepayment speedsIII PAC holders have a degree of protection against extension risk that is not provided to TAC holdersIV TAC pricing will be more volatile compared to PAC pricing during periods of rising interest rates, A. I onlyB. b. the yield to maturity will be higher than the current yield Thus, CMOs give holders a form of call protection not available in regular pass-through certificates. What type of bond offers a "pure" interest rate? If interest rates rise, then the average maturity will lengthen, due to a lower prepayment rate than expected. Each receipt is, essentially, a zero-coupon obligation, that is purchased at a discount, and which is redeemable at par at a pre-set date. Zero Tranche. Treasury STRIPS Regular way trades of U.S. Government bonds settle: CMOs have investment grade credit ratings A PAC offers protection against both prepayment risk (prepayments go to the Companion class first) and extension risk (later than expected payments are applied to the PAC before payments are made to the Companion class). Treasury Bills \hline collateralized mortgage obligationD. TACs do not offer the same degree of protection against extension risk as do PACs during periods of rising interest rates - hence their prices will be more volatile during such periods. Private CMOs (Collateralized Mortgage Obligations) are also called private label CMOs. I. Sallie Mae is a privatized agency When comparing a CMO Planned Amortization Class (PAC) to a CMO Targeted Amortization Class (TAC), which statements are TRUE? This pool, with say an average life of 12 years, is "chopped-up" into many different tranches, each with a given "expected life." Posted at 02:28h in espace o diner saint joseph by who has authority over the sheriff in texas combien de fois le mot pardon dans la bible Likes I. pension funds b. the securities are sold at a discount Governments. B. step up step down bond A TAC is a variant of a PAC that has a higher degree of prepayment risk B. higher prepayment risk, but the same extension risk as a Planned Amortization Class Newest issues of Treasury Notes are issued in: A 5-year, $1,000 par, 3 1/2% Treasury note is quoted at 101-4 - 101-8. IV. mortgage backed securities issued by a privatized government agencyD. This interest income is subject to both federal income tax and state and local tax. Thus, payments are received monthly. Bank issuers make non-conforming mortgages that cannot be sold to Fannie, Freddie or Ginnie and rather than hold them as investments, they can pool them into mortgage backed securities which are then placed into trust and sold as private label CMOs. The CMO is rated dependent on the credit quality of the mortgages underlying mortgage backed pass through securities held in trust. Treasury bond CDO tranches are: GNMA Pass-Through Certificates. $100,000. General Obligation Bond Thus, the certificate was priced as a 12 year maturity. PACs protect against extension risk, by shifting this risk to an associated Companion tranche. Targeted amortization classC. B. Sallie Mae stock is listed and trades Thus, the PAC class is given a more certain maturity date and hence lower prepayment risk; while the Companion classes have a higher level of prepayment risk if interest rates drop; and they have a higher level of so-called extension risk - the risk that the maturity may be longer than expected, if interest rates rise. The smallest denomination available for Treasury Bills is: A. What is the effect of the transaction on cash flows if (a)$15,000 cash is received for the equipment, (b) no cash is received for the equipment? An annual upward adjustment due to inflation is not taxable in that year; an annual downward adjustment due to deflation is tax deductible in that year. A Targeted Amortization Class (TAC) is a variant of a PAC. PAC tranches reduce prepayment risk to holders of that tranche b. Sallie Mae 1 / 39 The best answer is B. ETNs are "Exchange Traded Notes." They are an equity index linked structured product, that is listed and trades on an exchange. A TAC bond protects against prepayment risk; but does not offer the same degree of protection against extension risk. 95 Thus, the certificate was priced as a 12 year maturity. C. the same level of prepayment risk but a lower level of extension risk than a Planned Amortization Class IV. CMOs are Collateralized Mortgage Obligations. This is a tranche that only receives the principal payments from an underlying mortgage, and it is created with a corresponding IO (Interest Only) tranch that only receives the interest payments from that mortgage. CMOs are packaged and issued by broker-dealers. There are no new T-Receipt issues coming to market. PAC tranches increase prepayment risk to holders of that tranche T-Notes are sold by negotiated offering Treasury BondD. Treasury STRIPS are quoted on a yield to maturity basis, Treasury Bills are quoted on a yield to maturity basis When interest rates rise, prepayment rates rise A $1,000 par Treasury Note is quoted at 101-3 - 101-5. D. CMBs are direct obligations of the U.S. government. B. A. When interest rates rise, the price of the tranche risesB. The note pays interest on Jan 1st and Jul 1st. Treasury billD. Annual interest on the bonds is 3.25% of $5,000 face amount equals $162.50. III. are made monthly Yield quotes for collateralized mortgage obligations are based upon: A. average life of the trancheB. I TAC tranches protect against prepayment riskII TAC tranches do not protect against prepayment riskIII TAC tranches protect against extension riskIV TAC tranches do not protect against extension risk. If interest rates rise, then the expected maturity will lengthen, due to a lower prepayment rate than expected. Quoted as a percent of par in 32nds $.0625 per $1,000 A customer who wishes to buy will pay the "Ask" of 4.90. Treasury "STRIPS" and Treasury Receipts are bonds which have been stripped of coupons - essentially they are zero coupon Treasury obligations. As interest rates rise, CMO values fall; as interest rates fall, CMO values rise. d. have the same prepayment risk as companion classes, reduce prepayment risk to holders of that tranche, Which statements are TRUE when comparing PAC CMO tranches to "plain vanilla" CMO tranches? ", An investor in 30 year Treasury Bonds would be most concerned with: Which statements are TRUE about PO tranches? Principal repayments made later than expected are applied to the PAC prior to being applied to the Companion tranche III. A. A 5-year, $1,000 par, 3 1/2% Treasury note is quoted at 101-4 - 101-8. Treasury Bills are not subject to reinvestment risk because they are essentially short term "zero-coupon" obligations. The CDO market boomed until 2007 and then crashed and burned with the housing collapse of 2008-2009, when CDO holders discovered that their supposedly "lower risk" tranches defaulted. Plain vanilla CMO tranches are subject to both prepayment and extension risks. I, II, IIID. which statements are true about po tranches. D. loan to value ratio. d. the credit rating is considered the highest of any agency security, interest payments are exempt from state and local taxes, Which of the following are TRUE regarding collateralized mortgage obligations? These are issued at a discount to face and each interest payment made brings the notional principal of the bond closer to par. Note, however, that the "PSA" can change over time. II. Dealers typically quote agency securities, including Ginnie Maes, on a basis point differential to equivalent maturing U.S. The securities are purchased at a discount A Targeted Amortization Class (TAC) is a variant of a PAC. C. Series EE Bonds Each CMO tranche has an expected maturity, but the actual repayments are based on the rate of principal repayments that come in from the underlying mortgages - and this rate can vary. b. companion tranche II. II. which statements are true about po tranches. Federal, State and Local income tax. If the maturity lengthens, then for a given rise in interest rates, the price will fall faster, Which statements are TRUE about changes in market interest rates and collateralized mortgage obligations? individuals seeking current income Which statements are TRUE about IO tranches? Accrued interest on the certificates is computed on a 30 day month / 360 day year basis, The certificates are quoted on a percentage of par basis C. U.S. Government bond The securities underlying CMOs are GNMA or FNMA mortgage backed pass-through certificates. The spread between the bid and ask is 8/32nds. The note pays interest on Jan 1st and Jul 1st. Treasury "TIPS" are Treasury Inflation Protection Securities - the principal amount of these securities is adjusted upwards with the rate of inflation. storm in the night central message Facebook-f object to class cast java Instagram.
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