A Mortgage Pool Is Divided into a Basic Sequential CMO

question 23

Multiple Choice

A mortgage pool is divided into a basic sequential CMO structure that includes A-, B-, C-, and Z-tranches. What happens to the initial interest payment for the Z-tranche?

• A)It is immediately passed through to holders of Z-tranche securities.
• B)It is accumulated and held until the Z-tranche securities mature.
• C)It is exchanged for principal from the A-tranche.
• D)It is exchanged for principal from the B-tranche.
• E)It is exchanged for principal from the C-tranche.

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Definitions:

Refractory Period

A period immediately following an action (like a nerve impulse) during which a cell or organ cannot repeat that action, which in human sexuality refers to a recovery phase after orgasm during which it is physiologically impossible for a man to have additional orgasms.

Excitement Stage

The excitement stage is the initial phase in the sexual response cycle where physical and emotional sensations of arousal are heightened.

Sexual Response Cycle

A model that describes the sequence of physical and emotional changes that occur as a person becomes sexually aroused and participates in sexually stimulating activities, including phases such as excitement, plateau, orgasm, and resolution.

Masters and Johnson

Two pioneering sex researchers who conducted important research into the nature of human sexual response and sexual disorders.