If the expected default rate on a particular mortgage backed security is 4 % per

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1. If the expected default rate on a particular mortgage backed security is 4 % per year, and the corresponding Treasury security carries a 3% annual interest rate, what should be the interest rate on the mortgage backed security? What happens if the expected default rate rises to 8%?

    • 7 years ago
    If the expected default rate on a particular mortgage backed security is 4 %
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