1. What risk factors can cause the cash flow of a residential mortgage loan to be unknown?
Prepayment risk
Prepayment risk and credit risk
Prepayment risk and credit risk and liquidity risk
None of the above
2. All else equal, which of the following would have the lowest risk of default?
15 year fixed rate mortgage with 103% LTV
15 year fixed rate mortgage with 90% LTV
15 year fixed rate mortgage with 80 LTV
Not enough information
3. A simple mortgage pool consist of the following two mortages; a $90,000 mortgage at 6% for 15 years and a $110,000 mortgage at 5% for 30 years. The WAC is ___%, and the WAM is ______ years.
5.50, 22.50
5.45, 23.25
5.45, 22.50
5.00, 30.00