93. Overseas bank is pooling 50 similar and fully amortized mortgages into a pass-through security.
The face value of each mortgage is $100,000 paying 180 monthly interest and principal payments
at a fixed rate of 9 percent per annum.
If the entire mortga

Learning Objective: 26-02 Discuss and provide examples of the three major forms of asset securitization.
Saunders - Chapter 26 #88
89.
The underlying NHA MBS 15-year mortgage pool has a principal amount of $50 million and an
annual yield of 6 percent (pai

83. One hundred identical mortgages are pooled together into a pass-through security. Each
mortgage has a $150,000 principal, a fixed annual interest rate of 8 percent (paid monthly), and is
fully amortized over a term of 30 years.
What is the monthly pay

83.
One hundred identical mortgages are pooled together into a pass-through security. Each
mortgage has a $150,000 principal, a fixed annual interest rate of 8 percent (paid monthly),
and is fully amortized over a term of 30 years.
What is the monthly pay

Learning Objective: 24-01 Identify the potential for an interest rate swap and calculate the cash flows for each participant.
Saunders - Chapter 24 #9
10.
One reason for basis risk in an interest rate swap is that changes in the index on the variable
rate

77. The move toward market value accounting
A. increases banks' incentives to sell loans to avoid reporting capital losses.
B. decreases banks' incentives to sell loans to avoid reporting capital losses.
C. increases banks' incentives to sell loans since

CH26 Summary
Category
# of Questions
Accessibility: Keyboard Navigation
88
Learning Objective: 26-01 Discuss the mechanisms used to convert on-balance-
20
sheet assets to a securitized asset.
Learning Objective: 26-02 Discuss and provide examples of the t

CH26
Student: _
1. Deposit-taking institutions have followed and originate-to-distribute model of loan origination only
since the financial crisis in 2007.
True
False
2. The availability of a liquid secondary market for asset-backed securities provided an