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Question
A mortgage pool is divided into A, B, C, and Z-tranches as discussed in the textbook. What happens to the initial interest payment for the Z tranche?A. It is immediately passed through to holders of Z tranche securities.
B. It is accumulated and held until the Z tranche securities mature.
C. It is exchanged for principal from the A tranche.
D. It is exchanged for principal from the B tranche.
E. It is exchanged for principal from the C tranche.
Answer
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