To what extent should you know these things?

CFA Level I
#1

Based on exams you have taken, do you think these are fair game? CMO’s, CDO’s, MBS’s, CARS, CARDS, SPV’s, passthru’s…to what extent?

#2

Yes. I have seen questions on CMO’s, SPV’s on the sample exam… here is one I can remember… For a CMO are prepayment / interest rate risk different for various tranches? that is whole point of a CMO… While the overall prepayment risk is the same, the different tranches have different prepayment and interest rate risk…

#3

MBS usually comes up in the context of prepayment risk. SPV comes up in unique situations regarding off balance sheet receivables programs… big thing to remember is bankruptcy remote (hopefully) and ability to obtain a better credit rating than the company CAR and CARDS? Passthroughs - good to know for diversification of prepayment risk again… They’re definitely fair game, but will be simple concept questions…

#4

thanks.

#5

KNow the diff b/t CMO’s and passthroughs, and when it doubt, the answer is prepayment risk.

#6

> KNow the diff b/t CMO’s and passthroughs, and when it doubt, the answer is prepayment risk. that’s a super tip, really.

#7

i have seen questions on CMO tranches, SPV’s, ginnie mae mortgage passthrough securities, etc.