Assume an FI originates a pool of short term real
Assume an FI originates a pool of short- term real estate loans worth $ 20 million with maturities of five years and paying interest rates of 9 percent (paid annually).
a. What is the average payment received by the FI (both principal and interest) if no prepayment is expected over the life of the loans?
b. If the loans are converted into real estate certificates and the FI charges a 50 basis points servicing fee (including insurance), what are the payments expected by the holders of the securities, if no prepayment is expected?

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help