Identify the residual class of a CMO that gives the owner the right to any remaining collateral in the trust after all other bond classes have been retired plus any reinvestment income earned by the trust.
A)Class A bonds.
B)Class B bonds.
C)Class C bonds.
D)Class Z bonds.
E)Class R bonds.

Question

Quizplus · Accepted Answer

Class R bonds, or residual bonds, in a Collateralized Mortgage Obligation (CMO) structure, are those that give the owner the right to any remaining collateral in the trust after all other bond classes have been retired, plus any reinvestment income earned by the trust.

Identify the Residual Class of a CMO That Gives the Owner