Question: A CMO has 3 tranches, A , B and Z . If market rates increase, what is a likely outcome for tranche Z ? a

A CMO has 3 tranches, A, B and Z. If market rates increase, what is a likely outcome for tranche Z?
a. It receives nothing.
b. It is likely to be recalled through a "calamity call"
c. It receives more than expected when initially created.
d. The time to maturity will reduce.
e. The PAC structure will prevent tranche Z from increasing in value.
f. None of these are likely outcomes.
A CMO has 3 tranches, A , B and Z . If market

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