What is the difference in the average life variability of tranche G in structure II and tranche F in structure II?
What will be an ideal response?
Tranche F in Structure II is formed to give more stable cash flows and thus a lower variability in average life than found in tranche F in Structure I. This lower variability in average life comes at the expense of the support tranche or tranche G which has a higher average life than tranche F.
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