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1.Suppose there are 4 tranches A, B, C, and a Z-bond class in a sequential-pay agency CMO, where tranche A receives principal payments first. Which

1.Suppose there are 4 tranches A, B, C, and a Z-bond class in a sequential-pay agency CMO, where tranche A receives principal payments first. Which tranche in this CMO structure is most suitable for an investor that is most concerned about prepayment risk?

1) Z

2) C

3) A

4) B

2.

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