Question
A MPT is being issued backed by a mortgage pool that consists of 100 mortgages with an average balance of $150,000. Mortgages are 10 year
A MPT is being issued backed by a mortgage pool that consists of 100 mortgages with an average balance of $150,000. Mortgages are 10 year FRMs with annual payments. The mortgage rate in all of them is 5%. Assume that there is no prepayment and no servicer/guarantee fee in the projected cashflows of the mortgage pool. If the investor has a 2% discount rate, what will be their valuation of the MPT at origination be compared to the pool's par value at origination ($15,000,000)?
A. Higher
B. Lower
C. Cannot be determined with the information given
D. Equal
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started