A security that is sub-divided into securities called tranches is called a
A)principal-only strip
B)asian lookback option
C)range mortgage strip
D)collateralized mortgage obligation
E)none of the above

Question

Quizplus · Accepted Answer

A collateralized mortgage obligation (CMO) is a security that is divided into tranches based on risk and maturity. Each tranche may have different interest rates, payment schedules, and credit ratings. This allows investors to choose a specific tranche that matches their investment needs and risk tolerance.

A Security That Is Sub-Divided into Securities Called Tranches Is