问题如下：
The longest-term tranche of a sequential-pay CMO is most likely to have the lowest:
选项：
A. average life.
B. extension risk.
C. contraction risk.
解释：
C is correct.
For a CMO with multiple sequential-pay tranches, the longest-term tranche will have the lowest contraction (prepayments greater than forecasted) risk because of the protection against this risk offered by the other tranches. The longest-term tranche is likely to have the highest average life and extension risk because it is the last tranche repaid in a sequential-pay tranche.
时间分层time tranching，longest term tranche是最后还款的那一层，该层的延期风险最大，缩期风险最小。 无法理解
