26-41 The creation and sale of CMOs is based,at least in part,on the ability to segment the market for pass-through security products.

Question

Quizplus · Accepted Answer

CMOs are mortgage-backed securities that are structured by pooling together individual mortgages and then segmenting them into tranches. These tranches are then sold to investors with varying levels of risk and return. The ability to segment the market for pass-through securities into different risk and return profiles is what enables the creation and sale of CMOs.

26-41 the Creation and Sale of CMOs Is Based,at Least