SIE Exam Question 738: Answer and Explanation

Question: 738

Which of the following is a type of debt security that repackages and directs the payments of principal and interest from a collateral pool to different types and maturities of securities?

• A. CMO
• B. GIC
• C. REIT
• D. UIT

Correct Answer: A

Explanation:

A CMO (collateralized mortgage obligation) is a type of debt security that repackages and directs the payments of principal and interest from a collateral pool to different types and maturities of securities.