Bank of America issues a MBS based on a mortgage pool with the following terms: the mortgage pool face value, $10,000,000; the mortgage interest rate, 5%; the mortgage maturity, 4 years. Suppose the MBS has only one class of security, i.e., this is the basic MBS discussed during the class. The MBS has a 4 year maturity. What is the price of this MBS if the market interest rate is 4.5%? Assume annual compounding is used and the annual prepayment rate is 10%. Also, assume prepayment is paid based on the beginning balance of the mortgage pool each year. Finally, there is a 0.25% servicing fee each year based on the beginning balance of the mortgage pool.<\/p>
<\/p>
A -$12,208,906<\/p>
B - $10,051,108<\/p>
C - $11,203,871<\/p>
D -$10,548,45<\/p>", "transcribed_text": "", "related_book": { "title": "Artificial Intelligence Structures And Strategies For Complex Problem Solving", "isbn": "0321545893, 9780321545893", "edition": "6th Edition", "authors": "George Luger", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2022\/02\/62024d58d2b5c_04062024d5860c8b.jpg", "uri": "\/textbooks\/artificial-intelligence-structures-and-strategies-for-complex-problem-solving-6th-edition-9780321545893", "see_more_uri": "" }, "free_related_book": { "isbn": "0471592242", "uri": "\/textbooks\/trading-for-a-living-psychology-trading-tactics-money-management-1st-edition-978-0471592242-246380", "name": "Trading For A Living Psychology Trading Tactics Money Management", "edition": "1st Edition" }, "question_posted": "2024-05-22 01:00:08", "see_more_questions_link": "\/study-help\/questions\/business-human-resource-management-2020-May-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/principles-of-accounting-volume-1-\/a-bank-reconciliation-takes-time-and-must-balance-an-employee-1277976", "description": "A bank reconciliation takes time and must balance. 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