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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A market risk team at a hedge fund is developing stress test scenarios to assess the impact of changes in different market variables on the fund's portfolio of agency-backed MBS. The team wants to identify potential factors that would likely cause the rate of prepayments on the MBS portfolio to increase. Holding all else constant, which of the following would most likely result in increased prepayments in the portfolio?

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