Series 7 Exam Prep 28, Mortgage-Backed Securities and CMOs

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - How mortgage-backed securities pass through both principal and interest payments monthly. - Why falling interest rates lead to prepayment risk, a form of reinvestment risk. - Why rising interest rates cause extension risk, locking investors into lower yields for longer. - How PAC and Support tranches in a CMO redistribute prepayment and extension risk. - The inverse relationship between interest rates and the value of Interest-Only (IO) strips, a common exam trap. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep