You are given the details for two RMBS tranches. Using the fundamental information be- low, derive the missing metrics andexplain in detailwhich tranche is riskier?

Loan Max RMBS Credit Max RMBS

Proportion of Interest only loans 45% 35%

Proportion of P&I loans ? ?

Loans in Metropolitan Areas 75% 95%

Total Loan Value $1,200,000,000 $1,200,000,000

Total Asset Value $1,600,000,000 $900,000,000

LvR ? ?

Seasoning (Years) 5 Years 7.5 Years

CPR 18% 22%

Arrears (90 days) 1.4% 0.6%