( )is the risk that a borrower will make additional principal payments on the loan and thus reduce the total amount of interest paid.

Consider a traditional pass-through security and a collateralized mortgage obligation (CMO) with three tranches. Suppose 4% of the borrowers do not repay their loans. Which of the following statements are accurate? Check all that apply.

a.All holders of pass-through will lose 4% of their money.

b.Only the bottom tranche of CMO holders will lose 4% of their money.

c.Only the top two tranches of CMO holders will lose their money.

d. Only 4% of pass-through holders will lose their money