What was developed in the early 1980s to offset some of the problems with traditional mortgage pass-throughs?
A) variable rate mortgages.
B) collateralised mortgage obligations (CMOs)
C) leveraged buyouts (LBOs)
D) deep discount bonds (DDBs)
E) high yield bonds.

Question

Quizplus · Accepted Answer

Collateralised mortgage obligations (CMOs) were developed in the early 1980s to offset some of the problems with traditional mortgage pass-throughs. CMOs divide up the cash flows from the underlying mortgage pool into different classes, or tranches, of securities with different maturities and risks. This allows investors with different risk preferences to invest in the same pool of mortgages.

What Was Developed in the Early 1980s to Offset Some