Which of the following statements regarding mortgage-backed

Reference no: EM13260389

Which of the following statements regarding mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs) is most correct:

A. MBSs are created from CMOs.
B. Creating CMOs does not reduce the overall prepayment risk of a mortgage passthrough security.
C. The prepayment option of an MBS benefits the security holder.
D. The cash flows received on the MBS are quite similar to those of a callable coupon bond.

Reference no: EM13260389

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