What are the type of securities that guarantee timely interest and principal payments are made for moderate-to low-income, single-family home mortgages, issued by the FHA and VA? Federal Home Loan Mortgage Association (Freddie Mac) participation certificates Private-label pass-through securities Federal National Mortgage Association (Fannie Mae) mortgage-backed securities Government National Mortgage Association (Ginnie Mae) mortgage-backed securities Suppose an investment bank is trying to sell BBB rated mortgage-backed securities, with a 10\% 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 securities 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? Decrease the yield on the securities to 6% Increase the yield on the securities to 13% Sell the securities as collateralized debt obligations Sell the securities as participation certificates. In order to sell the mortgage-backed securities to the pension fund managers (who require low-risk securities) and hedge fund managers (who require high-yield securities), the investment bank decides it will need to turn the Mass into collateralized debt obligations that are segmented into three tranches. The first tranche investors get paid before the investors in the remaining two tranches, the second tranche investors get pald after the first tranche investors and before the third tranche investors, and the third tranche investors get paid after the investors in the other two tranches : The following tables outtine the payment order, vields, and ratings of each of the tranches within throe coos that the investment bank could create. Which cbo would be most appealing to pension fund mantagers? CDO1 EDO 7 cos3 Wheh tranche in that CDO woild be most abpealing to pension fund managers? Tranche 1 Tranche 2 Tranche 3 Which CDO would be most appealing to hedge fund managers? coc1 CEO? cpo3 Wrich tranche in that CDO would be most appeaing to hedge fund managers? Tranche 1 Which CDO would be most appealing to hedge fund managers? CDO 1 cos2 CDO3 Which tranche in that CDO would be most appealing to hedge fund managers? Tranche 1 Tranche 2 Tranche 3 Based on your answers to the previous questions, which CDO should the investment manager create so that both classes of investors will purchase the secunties? CDO 1 cos2 CDO 3