Which of the following best describes extension risk as faced by investors in mortgage pass$-$through securities$?$ The underlying collateral is fixed$-$rate mortgages.

A$.$ In a rising interest rate environment, there are fewer mortgagors prepaying their loans. This means that the principal balance remaining in the mortgage pool has become larger than what investors expected given the fewer mortgagors prepaying. Investors in pass$-$throughs are receiving less cash flows. Further, prices of pass$-$throughs are depressed further.

B$.$

The average duration of the mortgage collateral pool has dramatically shrunk.

C$.$

Investors in the residual tranche or lower$-$rung tranches will get their cash flows faster than initially expected.