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A CMO is being issued with 2 tranches and a residual: - Tranche A has 6,000,000 in principal and a 4.50% coupon. - Tranche B

A CMO is being issued with 2 tranches and a residual: - Tranche A has 6,000,000 in principal and a 4.50% coupon. - Tranche B has 5,000,000 in principal and a 5.00% coupon. The mortgages backing the security issued are FRM at a mortgage rate of 5.10% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR. The residual owns no principal at origination. In year 1, what is the cash flow to investors in Tranche B?

300,000.00

200,000.00

150,000.00

250,000.00

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