- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 45. Introduction to Asset-Backed Securities
- Subject 5. Collateralized Mortgage Obligations
CFA Practice Question
Consider the following four CMO structures:
Holding all other factors constant, which PAC tranche has the most protection against prepayment risk?
A. A or B
B. C
C. D
Explanation: The PAC tranche in CMO D has the biggest support tranche.
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