4. Imagine that a pool of fixed rate loans or bonds is stripped into interest-only and principal-only

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4. Imagine that a pool of fixed rate loans or bonds is stripped into interest-only and principal-only cash flows, which are then repackaged as IOs and POs, respectively, and that these securities are purchased by a new investor. Would the aggregate price the new investor pays be equal to the financing cost of the original pool? Should these prices be identical?

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Elements Of Structured Finance

ISBN: 9780195179989

1st Edition

Authors: Ann Rutledge, Sylvain Raynes

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