QUESTION 5 10 points Save Answer Consider a sequential pay CMO that is backed by 100 mortgages with average balance of $150,000 each. The mortgages have monthly payments with WAM 30 years and WAC-696. There s a servic ng fee of 0.4% and prepayment is according to 150% PSA. Tranche A holds $6,000,000 of the mortgage pool principal at origination, tranche B holds $3,000,000 and tranche Z holds $5,000,000. The rest of the pool principal is held by the SPV as a residual. The SPV has set a pass-through rate (coupon rate net of the servicer guarantee fee) of 4% for Tranche A, 4.5% for Tranche B and 5% for Tranche Z What is tranche A's outstanding principal balance at the end of the first month (beginning of the second month)