Question
Given the following information about a CMO: - 6 million of mortgage pool principal assigned to the floater class. 4 million assigned to the inverse
Given the following information about a CMO:
- 6 million of mortgage pool principal assigned to the floater class. 4 million assigned to the inverse floater class.
- Floater class coupon rule: LIBOR + 0.2%
- Inverse floater class coupon rule: 12.5% - L x LIBOR
- LIBOR in the first month is 3%
What is the coupon leverage L?
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Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Kristin L. Reiter, Paula H. Song
7th Edition
1640551867, 9781640551862
