26-86 This is an accrual class of a CMO that makes a payment to bondholders only when preceding CMO classes have been retired.
A)Class A bonds.
B)Class B bonds.
C)Class C bonds.
D)Class Z bonds.
E)None of the above.

Question

Quizplus · Accepted Answer

Class Z bonds are designed as a "Z-tranche" or "accrual tranche" of a CMO where interest and principal payments are not made until all prior tranches have been retired. This means that all other classes (Classes A, B, and C) must be fully retired before any payments are made to Class Z bondholders.

26-86 This Is an Accrual Class of a CMO That