Question
A CMO is being issued with 2 tranches: - Tranche A has $29 million in principal and a 3.1% coupon. - Tranche B has $5
A CMO is being issued with 2 tranches: - Tranche A has $29 million in principal and a 3.1% coupon. - Tranche B has $5 million in principal and a 4.8% coupon. The mortgages backing the security issued are FRM at a mortgage rate of 4.9% 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?
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Financial Accounting A Focus On Interpretation And Analysis
Authors: Richard F Kochanek, A Douglas Hillman
7th Edition
1111061750, 9781111061753
