1. The following question refers to the securitization transaction “CMLTI 2006-NC2” which is discussed in the FCIC report and in the FCIC resource library. Tranche A2-A had a lower yield than tranche M-1. True or False? Why?
2. The following question refers to the securitization transaction “CMLTI 2006-NC2” which is discussed in the FCIC report and in the FCIC resource library. CDOs invested only in the safe “A” rated tranches of the transaction. True or False? Why?
3. The following question refers to the securitization transaction “CMLTI 2006-NC2” which is discussed in the FCIC report and in the FCIC resource library. Losses of principal from defaults on the underlying mortgage pool are allocated first to the “A” rated tranches and then when the “A” tranches are reduced to zero the losses are allocated to the “M” rated tranches. TRUE or FALSE? Why?