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You wish to purchase a bond for your tax-exempt retirement account. Which one of the following should you prefer if you only consider the tax aspects of your selection?

Multiple Choice

• municipal GO bond

• municipal insured bond

• Treasury bond

• qualified private activity bond

• corporate bond

Which one of the following statements related to TIPS is correct assuming an inflationary environment?

Multiple Choice

• TIPS pay an interest payment based on the latest T-bill rate.

• TIPS pay a fixed coupon rate.

• The principal amount of a TIPS is adjusted annually for inflation.

• The interest rate is adjusted semiannually for inflation.

• TIPS have a maturity value of $1,000.

Seasoned mortgages are defined as mortgages that are, or have been, which of the following?

Multiple Choice

• prepackaged

• over 30 months old

• being paid faster than scheduled

• resold

• refinanced

You own a mortgage passthrough. Which one of the following statements correctly describes the payments you will receive on that security?

Multiple Choice

• The payments will decrease based on the interest shown on the amortization schedule.

• The payments will increase at a decreasing rate over the life of the security.

• The payments will decrease at a constant rate over the life of the security.

• The payments will be fixed for the life of the security.

• The payments will vary depending upon the amount paid on the underlying mortgages each period.

What are the securities which are created by splitting the cash flows from mortgage pools according to specific allocation rules called?

Multiple Choice

• collateralized mortgage obligations

• pooled mortgage obligations

• mortgage amortized strips

• secured mortgage strips

• collateralized housing bonds

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