The holder of an "A"tranche security in a sequential pay CMO benefits from a decline in market interest rates.

Question

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The holder of an "A" tranche security in a sequential pay CMO primarily benefits from a stable or predictable cash flow rather than from market interest rate movements. Interest rate declines mainly benefit holders of later tranches or those with floating rates, as they might see an increase in prepayments, which doesn't directly benefit "A" tranche holders in the same way.

The Holder of an "A"tranche Security in a Sequential Pay