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If an investor expects interest rates to go up, the investor buying a CMO security will most likely purchase: the last tranche in a sequentialpay
If an investor expects interest rates to go up, the investor buying a CMO security will most likely purchase:
the last tranche in a sequentialpay CMO.
a floatingrate tranche in a CMO.
a PAC tranche in a CMO.
In a CMO with a PAC tranche and a support tranche, the tranche that most likely has higher prepayment risk is:
the PAC tranche.
the support tranche.
neither, as both have roughly the same amount of prepayment risk.
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