QUESTION 1 A CMO is a pass-through security. True False QUESTION 2 Creating a CM

Question

QUESTION 1

A CMO is a pass-through security.

True

False

QUESTION 2

Creating a CMO reduces the total amount of risk in a mortgage-backed pool.

True

False

QUESTION 3

A _____ is a treasury security that has been partitioned into different securities.

Rule 144A bond

IDB bond

revenue bond

STRIP

QUESTION 4

The contract that defines the legal rights of bond issuers and bondholders is called the

covenant

debenture

encumbrance

indenture

QUESTION 5

ARMs reduce interest rate risk for I. the borrower,  II. the lender

I only

II only

I and II

Neither

Rule 144A bond

IDB bond

revenue bond

STRIP

Explanation / Answer

QUESTION 1

A CMO is a pass-through security. True

QUESTION 2

Creating a CMO reduces the total amount of risk in a mortgage-backed pool. False

QUESTION 3

A _____ is a treasury security that has been partitioned into different securities. STRIP

QUESTION 4

The contract that defines the legal rights of bond issuers and bondholders is called the indenture

QUESTION 5

ARMs reduce interest rate risk for I. the borrower,  II. the lender II only

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