A Collateralized Mortgage Obligation (CMO) has two tranches. Tranche A has a face value of $150 million and pays 6 percent annually. Tranche B has a face value of $100 million and pays 10 percent annually. If at the end of the first year, the CMO trustee receives total cash flows of $20 million (net of any administration fees), how are they distributed?

a.

$20 million to Tranche A and nothing to Tranche B.

b.

$20 million to Tranche B and nothing to Tranche A.

c.

$6 million to Tranche A and $14 million to Tranche B.

d.

$10 million to Tranche A and $10 million to Tranche B.

e.

None of the above.