1. A CMO is a pass-through security.
True
False
2. Creating a CMO reduces the total amount of risk in a mortgage-backed pool.
True
False
3. A _____ is a treasury security that has been partitioned into different securities.
Rule 144A bond
IDB bond
revenue bond
STRIP
4. The contract that defines the legal rights of bond issuers and bondholders is called the
covenant
debenture
encumbrance
indenture
5. ARMs reduce interest rate risk for I. the borrower, II. the lender
I only
II only
I and II
Neither