A client interested in the returns offered by CMOs asks you which type has the lowest prepayment risk. What should you say

Respuesta :

Answer: Planned amortization class (PAC) tranches

Explanation:

The planned amortization class (PAC) is a form of CMO which is typically put I place for that risk-averse investors. It gives a principal repayment schedule that have been predetermined in as much as there are certain range for the mortgage prepayment.

It should also be noted that it has top priority and also gets principal payments which can be up to certain amount.