Question 18 1 pts

Bank of America issues a MBS security based on a mortgage pool with the following terms: mortgage pool value,$25,000,000, mortgage interest rate, 6.5%, the mortgage loan terms, 3 years. Suppose that the MBS has only one class of security, i.e.. What is the price of this MBS if the market interest rate is 6%? Assume annual compounding as well as a constant annual prepayment rate of 10%. Also, assume prepayment is paid based on the outstanding loan amount at the beginning of each year.

$25,208,906

$25,345,980

$26,203,871

$26,348,450