"By creating a CMO, an issuer eliminates the prepayment risk associated with the underlying mortgages." Do you agree with this statement?

What will be an ideal response?

A CMO redirects cash flows making it possible to redistribute prepayment risk so that some investors reduce their prepayment risk exposure while others increase their prepayment risk exposure. Thus, one would agree with the statement that a CMO eliminates prepayment risk for certain investors, but would disagree with the statement that a CMO eliminates prepayment risk for all investors.