A Four-Class CMO Has Class A,Class B,Class C,and the Residual

question 48

Multiple Choice

A four-class CMO has Class A,Class B,Class C,and the residual Class Z securities outstanding. Which class has the longest duration?

• A)Class A
• B)Class B
• C)Class C
• D)Class Z
• E)All have the same duration

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Definitions:

Loan Covenant Restrictions

Conditions imposed by lenders that restrict certain actions of the borrower, intended to protect the lender's interests.

Debt Covenants

Provisions imposed by lenders in a loan agreement that require the borrower to meet certain conditions or restrict certain actions, often used to protect the lender's interests.

Conflicts of Interest

A situation in which a person or entity has competing interests or loyalties that can influence the impartiality of decisions.

Bank Regulators

Authorities or organizations responsible for supervising and regulating banks and financial institutions to ensure financial stability and compliance with laws.