Final answer:
The characteristics apply to a serial structure bond rated AAA is: D) It is backed by mortgage collateral.
Step-by-step explanation:
The question pertains to the characteristics of a serial structure bond that is rated AAA. According to the information provided, bonds issued by firms with an AAA rating by Moody's are considered to be relatively safe investments compared to other corporate bonds because AAA is the highest rating that can be awarded, indicating the lowest credit risk. Since the question compares serial structure bonds to pass-through securities, it is important to understand that pass-through securities typically involve mortgage-backed securities (MBS), which consist of mortgage loans that have been packaged together.
Given this context and the information mentioned, the correct answer to the question is D) It is backed by mortgage collateral. This characteristic relates more closely to pass-through securities while the AAA-rated serial structure bonds, as suggested by their high credit rating, are generally associated with low risk and do not have longer maturities by definition. Therefore, options A, B, and C do not necessarily apply to an AAA-rated serial structure bond which tends to have a strong creditworthiness and lower risk profile.