In Comparison to the Mortgage Securities We Have Previously Discussed

question 9

Multiple Choice

In comparison to the mortgage securities we have previously discussed, the unique characteristic of CMOs is that:

• A) CMO issuers retain ownership of the underlying mortgage pool
• B) CMOs are issued in multiple security classes
• C) The CMO mortgage pool is not overcollateralized
• D) CMOs are a pay-through in which all amortization and prepayments flow through to investors

---

Definitions:

Average Total Cost

The total cost divided by the number of units produced, representing the cost per unit.

Average Variable Cost

The cost per unit of output that varies with the level of production, typically including labor and material costs.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Total Fixed Cost

The total of all expenses that do not vary with the amount of production or output.