The Tranches in a Collateralized Mortgage Obligation (CMo) That Are

question 7

Multiple Choice

The tranches in a collateralized mortgage obligation (CMo) that are most likely to provide protection for investors against both extension and contraction risk are:

• A) planned amortization class (PaC) tranches.
• B) support tranches.
• C) sequential-pay tranches.

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Definitions:

Capital-Labor Ratio

The ratio of the total value of capital equipment to the labor force, indicating the level of capital intensity in production processes.

Productivity Growth

The increase in the efficiency of production in an economy, typically measured as the output per hour worked.

Cumulative Power

Cumulative power refers to the total amount of energy generated or exerted over a period of time.

Capital Deepening

An increase in the amount of capital per worker, which typically leads to higher productivity.