Ques12:

From the following, which statement describes the reason why the regular pass-through securities are not very attractive to insurance companies and pension funds seeking long-term duration assets to match their long-term duration liabilities?

Select one:

A. These bonds have the shortest average life with a maximum of prepayment protection.

B. Bondholders receive the promised coupon and principal payments but are not entitled to accrued interest payments.

C. They have short expected duration.

D. Their failures to offer prepayment protection.

E. They are zero coupon bonds and hence carry maximum amount of risk.