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Which of the Below Statements Is FALSE

Question 31

Multiple Choice

Which of the below statements is FALSE?


A) Shorter-term tranches and a longer-term tranche are created by excluding an accrual bond.
B) A reason for the shortening of nonaccrual tranches is that the interest that would be paid to the accrual bond is being allocated to the other tranches.
C) In many sequential-pay CMO structures, at least one tranche does not receive current interest.
D) An accrual tranche, or a Z bond, is similar to a zero-coupon bond.

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