Give two reasons why a CMO tranche is a path-dependent cash flow security
What will be an ideal response?
Pools of pass-throughs are used as collateral for the creation of collateralized mortgage obligations (CMOs). Consequently, for CMOs there are typically two sources of path dependency in a CMO tranche's cash flows. First, the collateral prepayments are path dependent. Second, the cash flow to be received in the current month by a CMO tranche depends on the outstanding balances of the other tranches in the deal. Thus we need the history of prepayments to calculate these balances.
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Indicate whether the statement is true or false
The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A) section of the annual report
a. True b. False Indicate whether the statement is true or false
The matching rule is applied
a. because it is required by the Internal Revenue Code. b. by expensing certain items immediately and in their entirety. c. to help make the bookkeeper's job easier. d. to help produce an accurate measurement of a company's performance.
Choose the correct word or words in parentheses. My grandparents (seldom, seldom ever) miss the nightly news