Question: A CMO is being issued with three tranches, with the principal and coupon rate given in the table below. What will be the weighted average

A CMO is being issued with three tranches, with the principal and coupon rate given in the table below. What will be the weighted average coupon on the CMO when issued?

Tranche

Principal

Coupon Rate

A

$25,000,000

4.25%

B

$55,000,000

5.5%

Z

$20,000,000

7.5%

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