Which one of the following statements regarding PAC bonds is correct?
A) The cash flows from a PAC bond are less certain than those from a Z-tranche bond from a sequential CMO.
B) PAC bondholders receive the residual cash flows from the underlying mortgage pool.
C) PAC bonds are defined by the specific rules which created them.
D) PAC bonds have bounds based on market interest rates.
E) PAC bond cash flows are unaffected by mortgage prepayments.
Correct Answer:
Verified
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