Question: What is the difference between a REMIC and a CMO
What is the difference between a REMIC and a CMO?
Answer to relevant QuestionsAn issuer is considering the following two CMO structures. The first structure is: Tranches A to E are a sequence of PAC I’s and F is the support bond. The second structure is: Tranches A to E are a sequence of PAC I’s, ...Answer the below questions. (a) “By creating a CMO, an issuer eliminates the prepayment risk associated with the underlying mortgages.” Do you agree with this statement? (b) Wall Street often refers to CMOs as ...Answer the below questions. a. Why is it necessary for a nonagency mortgage-backed security to have credit enhancement? b. Who determines the amount of credit enhancement needed? Why does the treatment of modified loans in a nonagency RMBS deal impact the bond classes? How can excess spread be a form of credit enhancement?
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