Question: OS. A CMO has two tranches. Tranche A has a principal value of $120 million and pays 5 percent annually. Tranche B has a principal

 OS. A CMO has two tranches. Tranche A has a principal

OS. A CMO has two tranches. Tranche A has a principal value of $120 million and pays 5 percent annually. Tranche B has a principal value of $100 million and pays 7 percent annually. 1) If at the end of the first year, the CMO trustee receives total cash flows of $36 million, how are they distributed? 2) If in the second year, the CMO trustee receives the same cash flows of S36 million, how are they distributed? 3) Now assuming that at the beginning of the 5th year, Tranche A has S20 milion principal outstanding, and the CMO trustee receives total cash flows of $36 million, how are they distributed

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