1. Which of the following is NOT a potential objective of securitizing assets?

a. Increases the efforts to monitor credit risks.

b. Increases the liquidity of assets.

c. Reduces the credit risk exposure.

d. Decreases the duration of assets.

e. Decreases the regulatory costs.

2. Mortgage-backed bonds (MBB) differ from pass-throughs and CMOs in which of the following ways?

a. The MBB bondholders have a junior claim to assets of the FI.

b. There is no direct link between the cash flow on the mortgages backing the bond and the interest and principal payments on the MBB.

c. MBBs normally remain off the balance sheet of the FI.

d. MBBs are more liquid.

e. MBBs require less amount of collateral.