STC Series 7 Chapter 8 Exam 2025
With 100% Correct Answers
What does ownership of a GNMA pass-through certificate represent? - CORRECT
ANSWER✔✔An undivided interest in a pool of residential mortgages
Describe an asset backed security - CORRECT ANSWER✔✔A security whose value and income
are collateralized by group of assets, usually bank receivables (e.g. mortgages)
With CMOs, the term ______ represents separate bond classes - CORRECT ANSWER✔✔Tranche
The principal value of TIPS may be adjusted based on changes to the __________. - CORRECT
ANSWER✔✔Consumer Price Index (CPI)
What is the dollar price of a T-bond with a bid of 98-24 and a par value of $100? - CORRECT
ANSWER✔✔98 and 24/32. Convert fraction into a decimal = .75. Then multiply $100 x
98.75% = $98.75
Each payment from GNMA will represent both ______ and _______. - CORRECT
ANSWER✔✔Both principal and interest.
Which tranche has the most unpredictable cash flow and maturity? - CORRECT ANSWER✔✔The
support or companion tranche.
What price do non-competitive bidders agree to pay at a Treasury auction? - CORRECT
ANSWER✔✔The lowest price (highest yield) of the accepted competitive bids.
With 100% Correct Answers
What does ownership of a GNMA pass-through certificate represent? - CORRECT
ANSWER✔✔An undivided interest in a pool of residential mortgages
Describe an asset backed security - CORRECT ANSWER✔✔A security whose value and income
are collateralized by group of assets, usually bank receivables (e.g. mortgages)
With CMOs, the term ______ represents separate bond classes - CORRECT ANSWER✔✔Tranche
The principal value of TIPS may be adjusted based on changes to the __________. - CORRECT
ANSWER✔✔Consumer Price Index (CPI)
What is the dollar price of a T-bond with a bid of 98-24 and a par value of $100? - CORRECT
ANSWER✔✔98 and 24/32. Convert fraction into a decimal = .75. Then multiply $100 x
98.75% = $98.75
Each payment from GNMA will represent both ______ and _______. - CORRECT
ANSWER✔✔Both principal and interest.
Which tranche has the most unpredictable cash flow and maturity? - CORRECT ANSWER✔✔The
support or companion tranche.
What price do non-competitive bidders agree to pay at a Treasury auction? - CORRECT
ANSWER✔✔The lowest price (highest yield) of the accepted competitive bids.
