FINRA Series 7 Exam Prep

Category - Series 7

CMOs are sold and priced based upon which of the following:
  1. expected average life
  2. stated maturity
  3. current yield
  4. par value
Explanation
Answer: A - expected average life. The average life of a CMO is the length of time that each dollar of invested principal is expected to remain outstanding. Pricing of CMOs is based upon this factor.
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