Paul Blackburn is describing mortgage backed securities and makes the following statements: Statement 1: A mortgage pass-through security is formed by pooling a large number of mortgages and issuing certificates that represent ownership shares in the pool. Because each mortgage borrower has the right to prepay the mortgage, the value of a pass-through security behaves as if the security has an embedded put feature. Statement 2: A collateralized mortgage obligation with sequential tranches is created by pooling mortgage pass-through certificates. Securities are issued in different tranches that have proportionate claims on the cash flows from the pass-through certificates. Are Blackburn’s statements correct Statement 1Statement 2 （）①A. Correct Correct ②B. Correct Incorrect ③C. Incorrect Incorrect
A. ①
B. ②
C. ③