Investors in mortgage-backed securities are most concerned with prepayment risk if pastime quotes are falling.
MBSs most frequently provide higher yields than U.S. Treasurys, but they also carry risks. These include reinvestment risks, prepayment risk, and the chance of terrible convexity.
When the costs of mortgage-backed securities drop, loan companies usually make bigger interest rates. Conversely, loan carriers decrease interest prices when the rate of MBSs goes up.
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