An MBB differs from a CMO or a pass-through in that: I. the MBB does not result in the removal of mortgages from the balance sheet. II. an MBB holder has no prepayment risk. III. cash flows on an MBB are not directly passed through from mortgages. a. I, II, and III b. I and II only c. II and III only d. I and III only e. I only

An MBB differs from a CMO or a pass-through in that: I. the MBB does not result in the removal of mortgages from the balance sheet. II. an MBB holder has no prepayment risk. III. cash flows on an MBB are not directly passed through from mortgages. a. I, II, and III b. I and II only c. II and III only d. I and III only e. I only

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 81.2C

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refers to the possibility that the debtors supported by bank credit are unable or unwilling to repay the debts on time as stipulated in the contract for various reasons, causing losses to the bank. (A) Credit risk (B) Market risk (C) Operational risk (D) Liquidity risk
Which of the following does not relate to credit risks? Select one: A. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations B. Credit risk also describes the risk that an insurance company will be able to pay a claim. C. It refers to the risk that a lender may not receive the owed principal and interest D. Credit risk describes the risk that a bond issuer may fail to make payment when requested E. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan
Customer loans are classified on a Depository Institution (DI)'s balance sheet as Select one: A. liabilities, because the customer may default on the loan. B. assets, because the DI earns servicing fees on the loan. C. assets, because the DI's major asset is its client base. D. assets, because DIs originate and monitor loan portfolios. E. liabilities, because the DI must transfer funds to the borrower at the initiation of the loan.
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