Multiple Choice
Which of the below statements is TRUE?
A) There is very little variability of the average life for the tranches.
B) The distribution of principal effectively protects a shorter-term tranche against extension risk; this protection comes from the other tranches.
C) There is very little or no protection provided for each tranche against prepayment risk.
D) None of these
Correct Answer:
Verified
Correct Answer:
Verified
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