What is the difference between a “mortgage” bond and a “mortgage-backed” bond?

Expert Solution

Answer : Difference between 'Mortgage Bond' and 'Mortgage Backed ' Bond :

Mortgage bond is a type of Bond which is secured against any property and the investor is subject to make the mortgage payment.In the event of default the holder of the mortgage bond holder sell the mortgaged property .

But Mortgage Backed Bond is the different concept.It actually is the pool of Mortgage. It is a kind of Derivative security.The Mortage Bond with the similar features relating to maturity , coupon , timimg of paymentsa are grouped together to form a Mortgage backed Bond which then could be sold to the buyer of sizable investment.

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