26-75 Mortgage-backed bonds (MBB)differ from pass-throughs and CMOs in which of the following ways?

Question

Quizplus · Accepted Answer

Unlike pass-throughs and CMOs, there is no direct link between the cash flows on the mortgages backing the MBB and the interest and principal payments on the MBB. Other differences listed in the options are not correct. MBB bondholders typically have a senior claim on the assets of the FI, and the assets backing the MBB issue are not normally removed from the balance sheet of the FI. Finally, tranches of a MBB may be structured differently to allocate prepayment risk differently.

26-75 Mortgage-Backed Bonds (MBB)differ from Pass-Throughs and CMOs in Which