A projected cash flow yield of about 3.5% sounds pretty good to me these days. C

ID: 2770308 • Letter: A

Question

A projected cash flow yield of about 3.5% sounds pretty good to me these days.

Consider a financial advisor working at a typical retail brokerage firm who (like me) also thinks that this Ginnie Mae MBS is attractively priced.

A. She should call her accounts and recommend this security to them.

B. She should call her accounts, but recommend this security to them only after she has explained the product.

C. She should call her accounts, but recommend this security to them only after she has explained the product and investment risks completely.

D. She should not recommend this product to her accounts under any circumstances.

The loan tovalue ltv is higher at 97, also it is 285 psa which says good amount of prepayment risk.

So she should recommended this security to them only after she hss explained the product and investment risks completly.

Answer C

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