If rates in the market fall between now and one month from now, the mortgage banker:
A) loses as the mortgages are sold at a discount.
B) gains as the mortgages are sold at a discount.
C) loses as the mortgages are sold at a premium.
D) gains as the mortgages are sold at a premium.

Question

Quizplus · Accepted Answer

If market rates fall, the existing mortgages with higher interest rates become more valuable. Therefore, they can be sold at a premium, leading to gains for the mortgage banker.

If Rates in the Market Fall Between Now and One