Question
Noting that these are agency-backed, what is the difference between a CMO with sequential payments, a CMO with an accrual bond, and a PAC CMO?
Noting that these are agency-backed, what is the difference between a CMO with sequential payments, a CMO with an accrual bond, and a PAC CMO? What is the PSA rate? How do these securities and the PSA rate help manage risk for an investor? Which is better for a financial institution like an insurance company or a pension fund: the mortgage pass-through or one of the CMOs in this question? Why?
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
