general

Question 1

prime rate

Answer 1

The prime rate (prime) is the interest rate that commercial banks charge their most creditworthy customers, generally large corporations. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate that banks use to lend to one another.

Question 2

hone loans vs mortgage bonds

Answer 2

Because we refer to property related loans as “mortgage bonds”, folk often assume that home loans and mortgage bonds are one and the same. They are not! “One is the security given to the bank under the mortgage bond agreement and the other is the actual loan obtained.

Question 3

cmos

Answer 3

A collateralized mortgage obligation (CMO) refers to a type of mortgage-backed security that contains a pool of mortgages bundled together and sold as an investment. Organized by maturity and level of risk, CMOs receive cash flows as borrowers repay the mortgages that act as collateral on these securities.