Question
What is the present value of a $20 million pool of 15-year mortgages with an 8.5 percent per year monthly mortgage coupon if market rates
| What is the present value of a $20 million pool of 15-year mortgages with an 8.5 percent per year monthly mortgage coupon if market rates are 5 percent? The GNMA guarantee fee is 5 basis points and the FI servicing fee is 45 basis points. |
| a. | Assume that the GNMA pass-through is fully amortized. (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.) |
| Present value | $ |
| b. | Assume that the GNMA pass-through is only partially amortized. Market rates are still 5 percent. If there is a lump sum payment at the maturity of the GNMA pass-through that equals 40 percent of the mortgage pool's face value, find the present value of the pass-through. (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.) |
| Present value | $ |
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a To calculate the present value of the fully amortized GNMA passthrough we can use the formula for ...
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
