Question: Question 7 5 pts Which tranche in a collateralized mortgage obligation ( CMO ) structure is most suitable for an investor who is willing to

Question

7

5

pts

Which tranche in a collateralized mortgage obligation

(

CMO

)

structure is most suitable for an investor who is willing to take on significant contraction risk and extension risk in exchange for a higher expected rate of return?

A floating

-

rate tranche in a CMO.

A support tranche in a PAC bond structure.

An inverse floating

-

rate tranche in a CMO.

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