1) What is the unique attribute of the cash flow of a MBS pool when comparing it to a conventional bond such as a Treasury or Corporate bond?
2) Investment bankers will pool ________ to create MBS.
3) Briefly discuss what is meant by extension risk in MBS analysis.
4) Briefly discuss what is meant by contraction risk in MBS analysis.
5) The one unknown (risk) that is unique to MBS pools is ___________________.
6) When considering two Fannie Mae pools, the MBS pool with a lower Coupon would imply a faster or slower prepayment rate?