Question: Suppose that a coupon pass-throughs are stripped into two classes: Class X-1 receives 20% of the principal and 50% of the interest. Class X-2 receives

Suppose that a coupon pass-throughs are stripped into two classes:

  • Class X-1 receives 20% of the principal and 50% of the interest.
  • Class X-2 receives 80% of the principal and 50% of the interest.

We know the coupon rate for X1 is 10.0%.What is the synthetic coupon rate on Class X-2?

Group of answer choices

6.0%

5.0%

4.0%

2.5%

None of the above

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