Why Are the Regular GNMA Pass-Through Not Very Attractive to Insurance

Why are the regular GNMA pass-through not very attractive to insurance companies and pension funds seeking long-term duration assets to match their long-term duration liabilities?

A) Because of their short expected duration.
B) Because these bonds have the shortest average life with a maximum of prepayment protection.
C) Because they are zero coupon bonds and hence carry maximum amount of risk.
D) Because of their failures to offer prepayment protection.

Correct Answer:

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