Question: You ae going to form a 4-tranche CMO from a pool of mortgages. The pool contains $500 million in 3-year mortgages. These mortgages make semi-annual

You ae going to form a 4-tranche CMO from a pool

You ae going to form a 4-tranche CMO from a pool of mortgages. The pool contains $500 million in 3-year mortgages. These mortgages make semi-annual payments. The rate on the mortgages is 4%. Treat this as an APR with semi-annual compounding. The A- Tranche holds 25% of the pool. The B-Tranche holds 25% of the pool. The C and D Tranches split the remaining portion of the pool evenly. The rates on the tranches are the rate on the underlying mortgages. At month 18, there is a 50% prepayment. The new amortizing payment after the prepayment (in dollars) is A 1 (round you answer to the nearest whole dollar. If you answer is 1 million, enter 1,000,000. do not use $ in your answer)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

You ae going to form a 4-tranche CMO from a pool of mortgages. The pool contains $350 million in 3-year mortgages. These mortgages make semi-annual payments. The rate on the mortgages is 4%. Treat...

You are going to form a 3-tranche CMO from a pool of mortgages. The pool contains $500 million in 1.5-year mortgages. These mortgages make quarterly payments. The rate on the mortgages is 6%. Treat...

Case Analysis 1. Compute the yield to maturity of Land'o'Toys' bonds before the purchase announcement and use it to determine the likely current bond rating. (Compare YTM to the table on p. 269)....

PowerPoint Assignment for BUS 401: Principles of Finance You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value...

Read 2.2 "The Financial Crisis" in Gitman and Zutter. Discuss the root causes of the crisis and damages that it caused to society as a whole. In hindsight, explain the specific lessons that can be...

Hi, I have a few questions to ask: 1.Consider the cash flow pattern of the CDS in Exhibit 2. One way to think about a credit default swap is that its cash flows can be replicated with long and short...

1) What is a credit default swap (CDS)? Consider the cash-flow pattern of the CDS in Exhibit 2 ofFrom free lunch to black hole: Credit Default Swaps at AIG. Can you set up a trading strategy using...

Hello I am looking to answer the following homework, let me know the steps when you do them. Financial Institutions FNAN 321 Problem Set #18 Securitization Cash Flows Instructions 1. Order: Questions...

I need your help in this. today. will be your client. For exclusive use Florida International University, 2015 REVISED SEPTEMBER 6, 2013 CRAIG FURFINE KEL757 The Return of the Loan: Commercial...

I need an expert for this. please check info for details. For exclusive use Florida International University, 2015 REVISED SEPTEMBER 6, 2013 CRAIG FURFINE KEL757 The Return of the Loan: Commercial...

Galaxy Industries buys back 312,000 shares of its stock from investors at $57 a share. Two years later it reissues this stock for $77 a share. The stock reissue would be recorded with a debit to Cash...

Olga Industries keeps records under the cash basis of accounting rather than the accrual basis. Olga's 2012 income statement and additional data from 2011 and 2012 are as follows: All accrued...

In question 3 in the in - class portion of this exam, you were asked to consider the equation: d y d x = 2 y + x + 5 During the exam, you were asked to find the integrating factor ( x ) which you...

How are the "Big Five" personality traits used to describe a manager's personality? By determining where the manager falls on the continuum for each trait By determining if the manager exhibits...

What contribution can a set of best HR practices make to this organization?

Appreciate the different approaches to studying HRM Using one of the five major HRM models, identify which aspects of the case illustrate traditional personnel management and HRM approaches.

How would you go about selecting a manager for a new location in Mexico? For instance, would you hire someone locally or send someone from one of your existing stores to live down in Mexico? What...