QUESTION 49

1. Which of the following statements regarding CMOs is NOT true?

   		a. CMOs are subject to prepayment risk.
   		b. CMOs allow investors to select the tranche that best meets their risk-return needs.
   		c. CMOs are secured bonds.
   		d. CMOs are issued by the U.S. government.

QUESTION 50

1. Which of the following is/are correct concerning convertible bonds? (1) Are likely to pay a lower yield than a comparable non-convertible bonds. (2) Are likely to pay a higher yield than a comparable non-convertible bonds. (3) Are more likely to be converted when a companys stock underperforms. (4) Are more likely to be converted when a companys stock outperforms.

   		a. 1 and 3.
   		b. 1 and 4.
   		c. 2 and 3.
   		d. 3 and 4.