A claim to the present value of the interest payments made by the mortgage holders in an MBS pool is

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An IO strip (interest-only strip) is a type of MBS derivative that represents the present value of the interest payments made by the mortgage holders in an MBS pool. It is called an IO strip because the investor who purchases it receives only the interest portion of the mortgage payments, while the principal portion is passed through to other investors in the MBS pool. Option A (CARS) refers to a type of MBS derivative that represents the cash flow rights to a specified portion of an MBS pool. Option C (CARD) refers to a type of MBS derivative that separates the principal and interest payments of an MBS pool into separate securities. Option D (PO strip) refers to a type of MBS derivative that represents the present value of the principal payments made by the mortgage holders in an MBS pool. Option E (prepayment claim) refers to a claim on the excess cash flows generated by an MBS pool due to mortgage prepayments.

A Claim to the Present Value of the Interest Payments