A Group of Loans Pooled for Securitization Is Expected to Yield

A group of loans pooled for securitization is expected to yield a return of 23%.The coupon rate promised to investors on securities issued against the pool of loans is 8%.The default (charge-off) rate on the pooled loans is expected to be 4.5%.The fee to compensate a servicing institution for collecting payments on the loans is 2%.Fees to set up credit and liquidity enhancements are 3%.The fee for advice on how to set up the pool of securitized loans is 1%.What is the residual income on this pool of loans?

A) 18.5%
B) 9%
C) 4.5%
D) 2%
E) None of the options is correct