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Collateralised mortgage obligation
       
 
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Collateralised mortgage obligation

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Collateralised mortgage obligation
A type of asset-backed Security, in this case backed by mortgage payments. Typically, such securities provide a higher return than normal fixed-rate securities but purchasers suffer prepayment Risk if mortgage holders redeem their mortgages. Because the right to redeem the mortgage is effectively an embedded call, such securities have negative Convexity.

See also collateralised Bond obligation, collateralised Debt obligation, collateralised loan obligation
Posted by  Privatebanking.com
 
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