Question
IDBI Money Market Mutual fund purchased a newly originated GNMA pass-through bond 7 years ago. The bond pays $1.2M per month. There is a 45bp
IDBI Money Market Mutual fund purchased a newly originated GNMA pass-through bond 7 years ago. The bond pays $1.2M per month. There is a 45bp annual servicing fee on the pool and GNMA insurance costs 12bps pa. The current mortgage rate is 3.9%. Find the current value of the GNMA bond if there is 23 years left to maturity. Assume no prepayment risk.
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International Financial Management
Authors: Cheol Eun, Bruce G. Resnick
8th edition
125971778X, 978-1259717789
