What is meant by a derivative mortgage-backed security?
Answer to relevant QuestionsDescribe the cash flow of a mortgage pass-through security. Explain the role of a support bond in a CMO structure. In a CMO structure with several PAC bonds, explain why, when the support bonds are paid off, the structure will be just like a sequential-pay CMO. Suppose that 8% coupon pass-throughs are stripped into two classes. Class X-1 receives 75% of the principal and 10% of the interest. Class X-2 receives 25% of the principal and 90% of the interest. Answer the below ...Why might an interest rate derivative such as an interest rate swap or interest rate cap be used in a securitization transaction for residential mortgage loans?
Post your question