This Is an Accrual Class of a CMO That Makes

question 105

Multiple Choice

This is an accrual class of a CMO that makes a payment to bondholders only when preceding CMO classes have been retired.

• A)Class A bonds.
• B)Class B bonds.
• C)Class C bonds.
• D)Class Z bonds.
• E)None of the above.

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Definitions:

Callable Bonds

Securities that the issuer has the option to repurchase before they reach their due date, for a predetermined amount.

Debentures

Debentures are a type of long-term debt instrument that are not secured by physical assets or collateral but backed only by the general creditworthiness and reputation of the issuer.

Effective Interest Method

A method of amortizing the discount or premium on bonds payable that results in a constant rate of interest over the life of the bond.

Semiannual

Occurring twice a year; a term often used in the context of payments, reporting periods, or interest calculations.