Question
A CMO is being issued with 2 tranches: - Tranche A has $25 million in principal and a 2.6% coupon. - Tranche B has $7
A CMO is being issued with 2 tranches:
- Tranche A has $25 million in principal and a 2.6% coupon.
- Tranche B has $7 millionin principal and a 5.3% coupon.
The mortgages backing the security issued are FRM at a mortgage rate of 6.2% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR.
What is the cash flow to Tranche A investors in year 1?Round your answer to two decimal points (e.g. if your answer is $45,666.6666, write 45666.67
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Personal Finance
Authors: E. Thomas Garman, Raymond E. Forgue
13th edition
1337099759, 978-1337516440, 1337516449, 978-1337099752
