AIWMI Exam CCRA-L2 Topic 3 Question 89 Discussion

Actual exam question for AIWMI's CCRA-L2 exam

Question #: 89
Topic #: 3

Statement 1: The Yields on the MBS PTCs are normally higher than the yields on the corporate bonds of similar ratings.

Statement 2: The reason for difference in yields on the corporate bonds and similarly rated PTCs is on account of the optionality in the PTC, the unfamiliarity of the structure and uncertainties in respect of legal and structural issues.

Which of the above statements is correct?

ANone of the statements

BBoth the statements

COnly Statement 2 is correct

DOnly Statement 1 is correct

Show Suggested Answer

Suggested Answer: D

by Lucina at Jun 03, 2024, 11:35 AM

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Willodean

4 months ago

Hmm, this one's a toughie. I'll go with B, just to hedge my bets. Who knows, maybe the llama knows the right answer.

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Emmanuel

3 months ago

I'm not sure, but I'll go with D. The yields on MBS PTCs are usually higher than corporate bonds.

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Deandrea

3 months ago

I disagree, I believe only Statement 2 is correct. The uncertainties in legal and structural issues play a big role.

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Javier

4 months ago

I think both statements are correct. The optionality in PTCs does make the yields higher.

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Aja

4 months ago

Wait, are we talking about mortgage-backed securities or did someone bring their llama to the exam? Either way, I'm going with C.

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Leatha

4 months ago

I disagree, I believe only Statement 2 is correct because of the uncertainties in PTCs.

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Leonor

4 months ago

I agree with Lai. The market demands a higher return to compensate for the added risk of PTCs.

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Delsie

4 months ago

User 3

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Kent

4 months ago

User 2

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Yoko

4 months ago

User 1

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Rosalind

5 months ago

I think both statements are correct.

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Lai

5 months ago

Statement 2 is definitely correct. The optionality and uncertainties around PTCs make them riskier, hence the higher yields.

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Davida

4 months ago

Yes, that's true. The unfamiliarity of the structure and legal issues add to the risk of PTCs, leading to higher yields.

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Ashlyn

4 months ago

I agree, Statement 2 is correct. The optionality and uncertainties around PTCs make them riskier, hence the higher yields.

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Latrice

4 months ago

Yes, that's why the yields on the MBS PTCs are normally higher than corporate bonds with similar ratings.

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Casie

4 months ago

I think both statements are correct. The yields on PTCs are indeed higher due to the unfamiliarity and uncertainties.

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Emiko

4 months ago

I agree, Statement 2 is correct. The optionality and uncertainties do make PTCs riskier.

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Lindy

4 months ago

I agree, Statement 2 is correct. The optionality and uncertainties do make PTCs riskier.

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