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Question: Suppose you are told that the cash flow yield of a pass-through security is 9% and that you are seeking to invest in a security with a yield greater than 8.8%.

a. What additional information would you need to know before you might invest in this pass-through security?

b. What are the limitations of the cash flow yield for assessing the potential return from investing in an RMBS?

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Category:- Basic Finance
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