In a CDO structure, when economic condition turns out to be better than previously expected, the cash flow from the pool of underlying assets (such as mortgage loans or consumer loans) is more than the level reflected in the original(previous) pricing of the tranches. In this scenario, which tranche' rate of return will turn out to be higher than others? → (1) Senior tranche; (2) Mezzanine tranche; (3) Junior tranche;
In a CDO structure, when economic condition turns out to be better than previously expected, the cash flow from the pool of underlying assets (such as mortgage loans or consumer loans) is more than the level reflected in the original(previous) pricing of the tranches. In this scenario, which tranche' rate of return will turn out to be higher than others? → (1) Senior tranche; (2) Mezzanine tranche; (3) Junior tranche;
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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