1) Collateralized Mortgage Obligations (CMOs) were created to _______ the cash flows of a MBS pool to different tranches for the purpose of making average life more predictable.
2) What are the underlying assets of a CMO?
3) Where in the payment/priority order for a typical CMO would you find the PAC tranche?
4) When considering a PAC tranche versus the A tranche of a Sequential Pay CMO, which of the two has the greater predictability of average life (maturity)?
5) Why is the Support tranche considered to be a ‘bodyguard’ for earlier tranches?