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Suppose an investment bank is trying to sell BBB rated mortgage-backed securities, with an 8% yield, to two classes of investors: ( 1 ) pension

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Suppose an investment bank is trying to sell BBB rated mortgage-backed securities, with an 8% yield, to two classes of investors: ( 1 ) pension fund managers and (2) hedge fund managers. However, neither class of investors wants to purchase the securities. Pension fund managers think the secunties are too risky for their low-risk portfolios, and hedge fund managers are willing to take the risk on the securities, but they feel that the yield is too low for their portfolios. What is one way that the investment bank could sell the securities to both classes of investors? Increase the yield on the securities to 12% Decrease the vieid on the securities to 5% Seli the securities as participation certificates Sell the securities as collateralized mortgage obligations

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