alleryStart learning →A pro rata bond structure pays principal to tranches in what way?
AOnly at final maturity
BThe shortest tranche first
CThe equity tranche first
DEach gets a proportionate share
Answer & Solution
Correct answer: D. Each gets a proportionate share
Pro rata structures pay each tranche its proportionate share of principal for the security's whole life.
Keep practising Securitization
Browse all Securitization questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
Why is credit card debt called a nonamortizing loan?Which US agency guarantees timely MBS payments with the full faith and credit of the US goWhich extra risk does an MBS carry compared with a vanilla corporate bond?A pool has Rs 200 lakh maturing in 120 months and Rs 600 lakh maturing in 240 months. WhatA mortgage pool has Rs 300 lakh at 6% and Rs 100 lakh at 8%. What is the weighted-average An MBS factor measures what?A principal-only (PO) stripped MBS has cash flows backed by what?Which MBS is backed by mortgages on single-family, one- to four-unit real estate?