Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Show formulas to fill in for months 0-120 The Blue Algae Mortgage Company has originated a pool containing 75 ten-year fixed rate mortgages with an
Show formulas to fill in for months 0-120
The Blue Algae Mortgage Company has originated a pool containing 75 ten-year fixed rate mortgages with an average balance of $100,000 each. The annual interest rate on all loans in the pool is 12% and all loans require monthly payments. Initial Pool Balance Annual Interest Rate Maturity (years) Payments per year Question 1: What price should Blue Algae obtain if the pool is sold immediately to an investor with a required annual return of 10% and no prepayment is expected? Payments from Borrowers Prepaid Principal Service Fee Cash Flow to Investor Month Interest Principal Pool Balance 0 Required Return Price ! 5 10 11 12 13 14 The Blue Algae Mortgage Company has originated a pool containing 75 ten-year fixed rate mortgages with an average balance of $100,000 each. The annual interest rate on all loans in the pool is 12% and all loans require monthly payments. Initial Pool Balance Annual Interest Rate Maturity (years) Payments per year Question 1: What price should Blue Algae obtain if the pool is sold immediately to an investor with a required annual return of 10% and no prepayment is expected? Payments from Borrowers Prepaid Principal Service Fee Cash Flow to Investor Month Interest Principal Pool Balance 0 Required Return Price ! 5 10 11 12 13 14Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started