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CMO is being issued with Tranche A has $58 million Tranche B has S12 million he mortgages backing the there is no guarantee/serve What is the dollar amount

CMO is being issued with Tranche A has $58 million Tranche B has S12 million he mortgages backing the there is no guarantee/serve What is the dollar amount

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A CMO is being issued with 2 tranches: Tranche A has $58 million in principal and a 3.7% coupon. Tranche B has $12 million in principal and a 5.8% coupon. The mortgages backing the security issued are FRM at a mortgage rate of 5.5% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR. What is the dollar amount of prepayments in year 1? Round your answer to two decimal points (e.g. if your answer is $4,566.6666, write 4566.67)
Transcribed Image Text:A CMO is being issued with 2 tranches: Tranche A has $58 million in principal and a 3.7% coupon. Tranche B has $12 million in principal and a 5.8% coupon. The mortgages backing the security issued are FRM at a mortgage rate of 5.5% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR. What is the dollar amount of prepayments in year 1? Round your answer to two decimal points (e.g. if your answer is $4,566.6666, write 4566.67)
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