CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

In a CMO structure with several PAC tranches that pay off sequentially, the structure effectively becomes ______ once all the support tranches are paid off.

A. a new PAC structure, wherein the PAC tranche that will be paid off first becomes the support tranche
B. a typical sequential-pay structure
C. a Z-tranche
Correct Answer: B

Once the support tranches are paid off, any prepayments must go to the PAC tranche that is currently receiving principal payments.

User Contributed Comments 3

User Comment
katybo Busted PAC
danlan2 Busted or broken PAC.
endurance I'm busted
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