Question
A CMO is being issued with three tranches, with the principal and coupon rate given in the table below. When issued the weighted average coupon
A CMO is being issued with three tranches, with the principal and coupon rate given in the table below. When issued the weighted average coupon on the CMO will be 6.425%. What is the coupon rate for tranche A?
| Tranche | Principal | Coupon Rate |
| A | $50,000,000 | ?% |
| B | $30,000,000 | 6% |
| Z | $20,000,000 | 10% |
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
