Suppose that a savings and loan association has decided to


Qusetion: Suppose that a savings and loan association has decided to invest in mortgage-backed securities and is considering the following two securities:

(i) a Freddie Mac pass-through security with a WAM of 340 months or

(ii) a PAC tranche of a Freddie Mac CMO issue with an average life of two years. Which mortgage-backed security would probably be better from an asset/liability perspective?

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Management Theories: Suppose that a savings and loan association has decided to
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