Which of These CMO Issues Has Characteristics of Both a Zero-Coupon

question 114

Multiple Choice

Which of these CMO issues has characteristics of both a zero-coupon bond and a regular bond?

• 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:

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Future Value

The value of an investment at a specific future date, including interest earned or compound interest.

Compounded Quarterly

A method of calculating interest where the interest earned each quarter is added to the principal, so that the balance doesn’t merely grow, it grows at an increasing rate.

Guaranteed Pay

An employment compensation structure where an employee is assured a specific amount of payment, regardless of performance or company profit.