A ________ security divides the cash flow from the underlying pool of mortgages on a pro rata basis to the securityholders, while a ________ security is created by altering that distribution of principal and interest from a pro rata distribution to an unequal distribution.

Question

Quizplus · Accepted Answer

A mortgage pass-through security distributes the cash flows from the pool of mortgages equally among the security holders, while a stripped mortgage-backed security alters this distribution to prioritize either principal or interest payments, creating an unequal distribution.

A ________ Security Divides the Cash Flow from the Underlying