Question: Residential Collateralized Mortgage Obligations (CMOs) issue securities in tranches. All of the following statements are correct EXCEPT: Investors can choose the (approximate) maturity of the

Residential Collateralized Mortgage Obligations (CMOs) issue securities in tranches. All of the following statements are correct EXCEPT:

Investors can choose the (approximate) maturity of the investment

Investors can choose different types of income rights such as principal-only or interest-only

Tranches can be rated by a ratings agency

The tranches are designed to allow the issuer to market the pool in the secondary market over an extended time period, selling first one tranche, then a second tranche later, and so on.

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