If a mortgage borrower makes prepayments without penalty to take advantage of falling interest rates, the lender

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If a mortgage borrower makes prepayments without penalty to take advantage of falling interest rates, the lender will most likely experience:

A. Extension risk.

B. Contraction risk.

C. Yield maintenance.

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Fixed Income Analysis

ISBN: 9781119850540

5th Edition

Authors: Barbara S. Petitt

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Question Posted: Nov 04, 2023 11:08 PM

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If a mortgage borrower makes prepayments without penalty to take advantage of falling interest rates, the lender

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The correct answer is B Contraction risk When a mortgage borrower prepays without penalty they are e...View the full answer

Fixed Income Analysis

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