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Unformatted text preview: efficiency as it relates to maximizing funds flow from sale. (8) Name five important characteristics of mortgage pools. Tell why each is important. (9) In general, would a falling rate of market interest cause the price of an MPT security to increase or decrease? Would the increase or decrease be greater if the security was issued at a discount? Would an increase in prepayment be likely or unlikely? Describe with an example. (10) Describe the basic activities of Fannie Mae in the secondary mortgage market. How are these activities financed? (11) Explain the importance of Fannie Mae and Freddie Mac to the housing finance system in the United States. (12) What is a CMO? Explain why a CMO has been called as much of a marketing innovation as a financial innovation. (13) What is the major difference between a CMO and the other types of mortgage-related securities? (14) Why are CMOs overcollateralized?...
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- Spring '08