SIE practice questionmediumMortgage-Backed Securities
An investor concerned about prepayment risk should be cautious when investing in which securities?
- ATreasury notes
- BMunicipal bonds
- CMortgage-backed securities✓ Correct answer
- DCommercial paper
Explanation
Why C — Mortgage-backed securities
Mortgage-backed securities are subject to prepayment risk if mortgages are paid off early. The other securities do not have this risk.
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