A CMO has been issued with 3 tranches and a residual. At origination: - Tranche A investors own $9 thousand of principal with a coupon rate of 3.50%. - Tranche B investors own $17 thousand of principal with a coupon rate of 3.70%. - Tranche Z investors own $12 thousand of principal with a coupon rate of 4.50%. - The residual carries $1 thousand of principal and receives all residual payments. Mortgages backing the security issued are fully amortizing fixed rate with mortgage rate of 4.50% with 30 year maturities and monthly payments. Assume no servicing/guarantee fee and no prepayments. Remember, the sum of tranches' principal is the total principal (balance) principal owed by the mortgage pool. What is the mortgage pool's starting balance at origination? Round your answers to cents (e.g. if your answer is $5600.0444, write 5600.04).

A CMO has been issued with 3 tranches and a residual. At origination: - Tranche A investors own $9 thousand of principal with a coupon rate of 3.50%. - Tranche B investors own $17 thousand of principal with a coupon rate of 3.70%. - Tranche Z investors own $12 thousand of principal with a coupon rate of 4.50%. - The residual carries $1 thousand of principal and receives all residual payments. Mortgages backing the security issued are fully amortizing fixed rate with mortgage rate of 4.50% with 30 year maturities and monthly payments. Assume no servicing/guarantee fee and no prepayments. Remember, the sum of tranches' principal is the total principal (balance) principal owed by the mortgage pool. What is the mortgage pool's starting balance at origination? Round your answers to cents (e.g. if your answer is $5600.0444, write 5600.04).

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Charter Corp. has issued 1,554 debentures with a total principal value of $1,554,000. The bonds have a coupon interest rate of 9%. a. What dollar amount of interest per bond can an investor expect to receive each year from Charter? b. What is Charter's total interest expense per year associated with this bond issue? c. Assuming that Charter is in a 39% corporate tax bracket, what is the company's net after-tax interest cost associated with this bond issue?
Given the following information of Electric Transport Debt value: $75,000. Debt information: 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for $1,030, the bonds make annual payments Equity value: $175,000. Equity information: Beta is 1.21, Market return is 13.1%, and Risk-free rate is 5.1% Assume the company's tax rate is 40%. Calculate the WACC for this firm. 11.80% 12.78% 7.48% 9.19%
Asap An entity issued 1 500 debentures with face value of R20 000 each. The coupon rate on the debentures is 12% paid annually in arrears. In order to speed the sale of the debentures, the directors decided to issue them at 10% discount. What amount of interest will be paid annually to an investor who bought 100 debentures?
Charter Corp. issued1,662 debentures with a $1,000 par value and 6% coupon rate. a. What dollar amount of interest per bond can an investor expect to receive each year from Charter? b. What is Charter's total interest expense per year associated with this bond issue? c. Assuming that Charter pays a 21% corporate tax, what is the company's net after-tax interest cost associated with this bond issue?
Rappaport Industries has 7,000 perpetual bonds outstanding with a face value of $2,000 each. The bonds have a coupon rate of 6.9 percent and a yield to maturity of 7.2 percent. The tax rate is 35 percent. What is the present value of the interest tax shield? Multiple Choice $352,800 O $966.000 O $338,300 O $4,410.000 Examon
Assume that Western Asset Management Company LLC (WAMC) has $10,000 par value zero-coupon bonds outstanding. WAMC bonds are currently trading at $5,500 with 8 years to maturity. WAMC tax bracket is 35%. Calculate the cost of debt for WAMC (System will not accept percentage (%) sign, therefore write your answer upto four decimals).
Estimating Components of both WACC and DDMAn analyst estimates the cost of debt capital for Abbott Laboratories is 3.0% and that its cost of equity capital is 5.0%. Assume that ABT’s statutory tax rate is 21%, the risk-free rate is 2.1%, the market risk premium is 5%, the ABT market price is $84.10 per common share, and its dividends are $1.28 per common share.(a) Compute ABT’s average pretax borrowing rate and its market beta. (Round your answers to one decimal place.) Average borrowing rate = Market beta = (b) Assume that its dividends continue at the current level in perpetuity. Use the constant perpetuity dividend discount model to infer the market's expected cost of equity capital. (Hint: Use Price per share = Dividends per share/Cost of equity capital.) (Round your answer to one decimal place.)
Goldtiger is issuing a CMO with 2 tranches:- Tranche A has $29 million in principal and a 3.9% coupon.- Tranche B has $20 million in principal and a 3.9% coupon. The mortgages backing the security issued are FRM at a mortgage rate of 3.9% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR.In year 1, what is the cash flow to investors in Tranche B? Round your answer to two decimal points (e.g. if your answer is $50,999.4532, write 50999.45).

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