Suppose that you have invested in a principal-only CMO with an expected life of 8 years. What likely will happen to the duration of your security if mortgage interest rates decrease by 2%? The...

Suppose that you have invested in a principal-only CMO with an expected life of 8 years. What likely will happen to the duration of your security if mortgage interest rates decrease by 2%?

The duration will increase

The duration will decrease

The duration won't change, because the security is guaranteed by the U.S. government

Not enough information

Jun 11, 2022

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Suppose that you have invested in a principal-only CMO with an expected life of 8 years. What likely will happen to the duration of your security if mortgage interest rates decrease by 2%? The...

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