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1. Use the following statements to answer questions 4-5. Statement A: The priority of payments in a structured security is found in the purchase agreement.

1. Use the following statements to answer questions 4-5.

Statement A: The priority of payments in a structured security is found in the purchase agreement. Statement B: For two bonds with the same coupon and maturity, the percentage price change is greater when the yield increases than when it decreases. Statement C: PAC tranches protect RMBS investors when interest rates rise. Statement D: Entering an interest rate swap as the fixed rate payer increases portfolio duration, all else equal. Which statement is correct?

A. Statement A B. Statement B C. Both statement A and B D. Neither statement

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