MBS

UVAstudent · May 12th, 2008, 5:01 am

When an institution buys MBS and CMOs, is the price negotiated or fixed by the seller? How does the rating information (AAA) used to price the security or set the yield?

street · May 14th, 2008, 3:49 am

The price is fixed by the seller. I am not sure I understand the grammar of your last sentence. The rating information is not used in the setting of the price. The main issue is pre-payment and then default.Are you a UVa student? I am as well. What dept.?