Ran into a question today on the Schweser QBank:
[question removed by admin]
I answered C, because it is my understanding that CMOs are collateralized by MBS (pass-through securities), which are in turn collateralized by a pool of loans. Therefore, it would be technically incorrect to say that CMOs are collateralized directly by pools of loans. However, the answer given by the QBank is A. I could see how it would be correct to say that CMOs are collateralized by pools of loans, but I cannot conceive of how it is incorrect to say that CMOs are collateralized by pass-through securities. Perhaps I am missing something obvious. Any help is appreciated.