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Assume the 10-year interest rate falls despite strong economic data like low unemployment and high GDP growth. Which do you expect to perform best? Assume that the only risk that differs between Treasury bonds and mortgage securities is prepayment risk.

a) Mortgage backed securities (10-years to maturity)

b) 10-year Treasury securities.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92727016

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