Trust and Savings Bank originates a pool of 500, 30-year mortgages, each averaging $150,000 with an annual mortgage coupon rate of 8 percent per annum. Assume that the GNMA credit risk insurance fee is 6 basis points and that the bank's servicing fee is 19 basis points.

a. What is the monthly mortgage payment? (1 mark)

b. For the first two payments, what portion is interest and what portion is principal repayment? (1 mark)

c. What are the expected monthly cash flows to GNMA bondholders? (1 mark)

d. What is the present value of the GNMA pass-through bonds? Assume that the risk-adjusted market annual rate of return is 8% compounded monthly

e. What are the expected monthly cash flows for the bank and GNMA?