问题如下:
Which of the following statements regarding prepayment risk is least accurate?
选项:
A. Support tranches make investors face a high level of prepayment risk.
B. The creation of collateralized mortgage obligations(CMO) can eliminate the prepayment risk.
C. Prepayment reflects the amount and timing of the cash flows from a mortgage loan can't be known with certainty.
解释:
B is correct.
The collateralized mortgage obligations(CMO) can't change or eliminate prepayment risk, but can only distribute the various forms of the risk among different bond classes.
Support tranche absorbed prepayment risk in order to get a higher expected rate of return.
Prepayment risk is the uncertainty that the cash flows will be different from the scheduled cash flows as set forth in the loan agreement.
选项A不理解,Support tranches 是起保护垫的作用,怎么会make investors face a high level of prepayment risk?