The variability in the average life of the PAC tranche of a CMO relative to the average
Question:
The variability in the average life of the PAC tranche of a CMO relative to the average life of the mortgage pass-through securities from which the CMO is created is:
A. Lower.
B. The same.
C. Higher.
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A is correct The purpose of creating different bond classes in a CMO is to provide a riskr...View the full answer
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