Question

In: Finance

the difference between the 30 year mortgage rate and the 30-year treasury bond rate is primary...

the difference between the 30 year mortgage rate and the 30-year treasury bond rate is primary attribute to

a. interest rate risk

b. reinvestment rate risk

c. credit risk

d. insurance risk

Solutions

Expert Solution

Ans c. credit risk

Mortgage rate are interest charged on mortgage by the lender. It can be either fixed or variable, fluctuating with a benchmark interest rate.

Treasury bond are fixed rate government debt securities. Interest is fixed on treasury bonds.

In Long term, there is more risk on mortagage rate fluctuation than Treasury bond rate.

jeff jeffy answered 2 years ago
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