Question: Use the information below for the next three questions. The following information is available for a recently issued collateralized mortgage obligation (CMO).Tranche A has a

Use the information below for the next three questions.

The following information is available for a recently issued collateralized mortgage obligation (CMO).Tranche A has a face value of $50 million and pays 6% annually.Tranche B has a face value of $50 million and pays 8% annually.The underlying assets are 30-year fixed rate mortgages.Assume there is no amortization of the principal and tranche A receives the initial prepayments.

What are the annual payments promised to Tranche A and Tranche B, respectively?Assume there are no prepayments.

Group of answer choices

$3,632,446; $4,000.000

$3,632,446; $4,441,372

$4,000,000; $3,000,000

$4,441,372; $3,632,446

$3,000,000; $4,000,000

(Use the information from Q13)At the end of the first year, the trustee of the CMO receives total cash flows of $10 million.How are these payments distributed to Tranche A and B, respectively?

Group of answer choices

$4,441,372; $5,558,868

$5,558,628; $4,441,372

$4,000,000; $6,000,000

$5,558,628; $4,000,000

$6,000,000; $4,000,000

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