Houjichasan

z receives both int. and principal AFTER OTHER TRANCHES HAVE BEEN PAID OFF....

In the initial phase while it is offering protection to senior tranches - no interest payment, no reinvestment risk .

Later it receives both principal and interest payments. (once the senior tranches have been completed). Read the example in the text book (not sure about the page numbers - but there is a numerical example with numbers showing the behavior of an accrual tranche).

CP