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Suppose you are told that the cash flow yield of a pass-through security is 11% and that you are seeking to invest in a security
Suppose you are told that the cash flow yield of a pass-through security is 11% and that you are seeking to invest in a security with a yield greater than 10.7%. Answer the below questions. (a) What additional information would you need to know before you might invest in this pass- through security? (b) What are the limitations of the cash flow yield for assessing the potential return from investing in a RMBS?
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