Why are the class C bonds of a CMO highly attractive to insurance companies and pension funds?
A)Because of their ability to offer perfect prepayment protection.
B)Because of the shortest average life with a minimum of prepayment protection.
C)Because of their long expected duration.
D)Because they are basically zero coupon bonds and hence carry a minimum amount of risk.

Question

Quizplus · Accepted Answer

Class C bonds of a CMO are attractive to insurance companies and pension funds because they have a long expected duration, which aligns well with the long-term liabilities of these institutions.

Why Are the Class C Bonds of a CMO Highly