A four-class CMO has Class A,Class B,Class C,and the residual Class Z securities outstanding. Which class has the longest duration?

Name: A four-class CMO has Class A,Class B,Class C,and the residual Class Z securities outstanding. Which class has the longest duration?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Generally, residual classes have the longest duration as they are last in line to receive cash flows from the underlying assets. Therefore, Class Z is likely to have the longest duration among the four classes.

A Four-Class CMO Has Class A,Class B,Class C,and the Residual