Q. Which of the following statements is true regarding mortgage-backed securities?
A.Insurance companies prefer the first-loss tranche.
B.When interest rates rise, prepayments will likely accelerate.
C.When interest rates fall, the low-risk senior tranche will amortize more quickly.
I has been answered previously please refer to AI section
the answer would be C because when interest rate falls the people go for refinancing so low risk senior tranchewill amortize more quickly.