12: OTHER SECURITIES PRODUCTS (61) Flashcards
1
Q
T/F: Each tranche in a CMO will have a different risk & maturity
A
True
2
Q
T/F: Tranches are groups of mortgages in a CMO organized by their risk profile
A
True
3
Q
T/F: Investors in a CMO don’t own the CMO directly, they own bonds issued by the CMO
A
True
4
Q
If an investor owns 2 tranches of a CMO, one with 1-3 year maturity and one with 12-15 years maturity, which trance has the higher risk profile?
A
The 12 - 15 year maturity would be higher risk
5
Q
CMOs can be purchased for as little as $____
A
$1,000
> can be bought for $1k but usually trade in min amounts of $25k
