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Given the following information about a CMO (same set-up as previous question); 6 million of mortgage pool principal assigned to the floater class. 4 million

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Given the following information about a CMO (same set-up as previous question); 6 million of mortgage pool principal assigned to the floater class. 4 million assigned to the inverse floater class. Floater class coupon rule: LIBOR +0.29 Inverse floater class coupon rule: 12.5% - L X LIBOR LIBOR in the first month is 2% What is the coupon rate of the inverse floater class in the first month? 8.7596 9.596 7.25% 10.50% QUESTION 8 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% -LX LIBOR LIBOR in the first month is 3% What is the coupon leverage L? 4.00 1.50 6.00 0.66

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