Under the Standard Default Rate Assumption model, the highest rate of default in mortgages is at the beginning. True False QUESTION 7 Which of the following mortgages will have the largest monthly payment? Fully amortizing 30-year FRM, annuali - 3%, mortgage amount $200,000 Fully-amortizing 25-year FRM, annuali - 4%, mortgage amount $200,000 30-year FRM, annuali - 3%, mortgage amount $200,000 with a balloon payment of $20,000 at the end of the loan Fully amortizing 30-year FRM, annuali - 4%, mortgage amount $200,000 Fully-amortizing 30 year FRM, annual i = 2%, mortgage amount $200,000 QUESTIONS Which of the following is NOT TRUE about Mortgage Backed Securities (MBS)? MBS provides liquidity for an otherwise illiquid asset There are tax benefits associated with investing in MBS NI MBS are safe assets MBS repays principal throughout the life of the investment MBS are long duration assets that investors can match with long term liabilities