Question: Please use the image below: EhBanc has just created a CMO using $500,000,000 in 4-year, annual-payment mortgages. The rate on the mortgages in the pool

 Please use the image below: EhBanc has just created a CMO

Please use the image below:

using $500,000,000 in 4-year, annual-payment mortgages. The rate on the mortgages in

EhBanc has just created a CMO using $500,000,000 in 4-year, annual-payment mortgages. The rate on the mortgages in the pool is 3%. The CMO has two tranches: an IO tranche and a PO tranche. What are the expected payments to each tranche? (Do not round intermediate calculations. Round payments to nearest dollar. Use commas.) A B C 1 Year Expected IO Expected PO Payment Payment 2 1 3 2 A 3 5 4 Suppose that in year 2 there are aggregate prepayments of $90,000,000. How does this change the cash flows to the IO and PO holders? (Do not round intermediate calculations. Round payments to nearest dollar. Use commas.) A B C 1 Year New 10 New PO Payment Payment 2 2 3 3 4 4

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