There are those who still believe that MBSs can be risky, as they may incur credit losses and prepayment penalties. These risks often exceed any gains. MBSs are less transparent than corporate bonds, which provide some transparency about the financial status of the company that issued them.
MBS is similar to corporate bond trading in the sense that they both buy and sell debt instruments with the goal of making profits, no matter what situation arises. This ultimately leads to a successful result. The main difference is the type of security traded. While corporate bonds are issued by a single entity such as a corporation or government agency, mortgage-backed securities combine multiple loans to create broader asset classes.