Question
1.BOA issues $200m in CMO. 40% of the issue is floater tranche with index = LIBOR (currently 1.5%) and margin = 2%. The remaining 60%
1.BOA issues $200m in CMO. 40% of the issue is floater tranche with index = LIBOR (currently 1.5%) and margin = 2%. The remaining 60% is inverse floater tranche that is designed to keep the total cost of financing constant. The next year LIBOR goes up to 3%. What would be the interest paid to the invese floater tranche investors? Enter your answer in percent, but without percent sign.
2.BOA issues $300m in CMO. 80% of the issue is floater tranche with index = LIBOR (currently 1%) and margin = 2%. The remaining 20% is inverse floater tranche that is designed to keep the total cost of financing constant. The next year LIBOR goes up to 3%. What would be the interest paid to the whole pool? Enter your answer in percent, but without percent sign. Hint: its a short question, not many calculations
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
2nd Edition
0324117752, 9780324117752
