问题如下:
Brown owns a mortgage pass-through security, when interest rates decline, it is most likely affected by:
选项:
A.Extension risk.
B.Contraction risk.
C.Operation risk.
解释:
B is correct.
Contraction risk is the risk that loan principal will be repaid more rapidly than expected, typically when interest rates have declined. Homeowners will refinance at the available lower interest rates.
老师,从这题的题干来看,interest decline,不是可以导致contraction risk 上升,也可以导致extension risk 下降嘛?为什么只能选择affect contraction risk?