ABC Bank originated a pool of containing 10 three-year fixed-rate mortgages with loan amount of $ 100,000 each. All mortgages in the pool carry a rate of 6% with annual payments. The guarantee and servicing fee is 1%. ABC Bank would like to sell the pool to investors via Mortgage Pass Through ( MPT) security. Suppose that 100,000 shares will be issued and there are no prepayment and no default for the borrowers. If market interest rate is 5.5%, what is the price for each MPT security? PLEASE SOLVE USING EXCEL AND SHOW FORMULAS AND STEPS AND THE ANSWERS. THANK YOU

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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ABC Bank originated a pool of containing 10 three-year fixed-rate mortgages with loan amount of $
100,000 each. All mortgages in the pool carry a rate of 6% with annual payments. The guarantee and
servicing fee is 1%. ABC Bank would like to sell the pool to investors via Mortgage Pass Through (
MPT) security. Suppose that 100,000 shares will be issued and there are no prepayment and no
default for the borrowers. If market interest rate is 5.5%, what is the price for each MPT security?
PLEASE SOLVE USING EXCEL AND SHOW FORMULAS AND STEPS AND THE ANSWERS. THANK YOU
Transcribed Image Text:ABC Bank originated a pool of containing 10 three-year fixed-rate mortgages with loan amount of $ 100,000 each. All mortgages in the pool carry a rate of 6% with annual payments. The guarantee and servicing fee is 1%. ABC Bank would like to sell the pool to investors via Mortgage Pass Through ( MPT) security. Suppose that 100,000 shares will be issued and there are no prepayment and no default for the borrowers. If market interest rate is 5.5%, what is the price for each MPT security? PLEASE SOLVE USING EXCEL AND SHOW FORMULAS AND STEPS AND THE ANSWERS. THANK YOU
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