The sum of the market values of all the classes of a CMO is greater than the total value of the GNMA pass-throughs backing the CMO because
A) the CMO has less credit risk than the pass-through.
B) CMO investors can choose their degree of prepayment protection.
C) the government guarantees CMOs' performance.
D) CMOs have a more favorable tax status than pass-throughs.
E) CMO investors have no prepayment risk.
Correct Answer:
Verified
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