Series 7 - General Securities Representative Exam
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Which of the following is NOT TRUE about a Plain Vanilla CMO?
It is also known as a sequential pay CMO
A
It is the most basic type of CMO
B
It pays interest on all of its existing tranches at the same time
C
They have a set maturity date and no prepayment risk
D
Explanations
Plain Vanilla CMOs do not have a predetermined maturity date. They also have prepayment risk; as a tranche can be called sooner than expected