A major source of risk faced by CMO issues is
A) Default risk.
B) Prepayment risk.
C) Counterparty risk.
D) Choices a and b.
E) Choices a, b and c.

Name: A major source of risk faced by CMO issues is A) Default risk. B) Prepayment risk. C) Counterparty risk. D) Choices a and b. E) Choices a, b and c.
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Question

Quizplus · Accepted Answer

Prepayment risk is a major source of risk for Collateralized Mortgage Obligations (CMOs) because the underlying mortgages can be paid off early, affecting the timing and amount of payments to investors.

A Major Source of Risk Faced by CMO Issues Is