Explanation:
A pass-through security distributes the underlying mortgage cash flows pro rata to investors.
This means investors receive their share of principal and interest in proportion to their ownership interest.
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Q-47.3 What is the essential (defining) feature of a pass-through?
A
a) Cash flows distributed pro rata
B
b) Cash flows are structured
C
c) Loans are fixed-rate
D
d) Loans are conforming
