One hundred identical mortgages are pooled together into a pass-through security.Each mortgage has a $150,000 principal,a fixed annual interest rate of 8 percent (paid monthly),and is fully amortized over a term of 30 years.

What is the monthly payment on the mortgage pass-through?
A)$100,000.
B)$110,065.
C)$12,000.
D)$12,000,000.

Question

One hundred identical mortgages are pooled together into a pass-through security.Each mortgage has a $150,000 principal,a fixed annual interest rate of 8 percent (paid monthly) ,and is fully amortized over a term of 30 years.

What is the monthly payment on the mortgage pass-through?

What is the monthly payment on the mortgage pass-through?
A)$100,000.
B)$110,065.
C)$12,000.
D)$12,000,000.

Quizplus · Accepted Answer

To find the monthly payment on a mortgage, we can use the following formula:

PMT = P*r*(1 + r)^n / [(1 + r)^n - 1]

Where PMT is the monthly payment, P is the principal ($150,000), r is the monthly interest rate (8%/12 = 0.006667), and n is the total number of monthly payments (30 years * 12 months = 360).

PMT = 150000 * 0.006667 * (1 + 0.006667)^360 / [(1 + 0.006667)^360 - 1]
PMT ≈ $1,100.65

To find the monthly payment on the mortgage pass-through, we simply multiply the monthly payment of one mortgage by the total number of mortgages:

Monthly payment on mortgage pass-through = 100 * $1,100.65
Monthly payment on mortgage pass-through ≈ $110,065.

Therefore, the best answer is (B) $110,065.

One Hundred Identical Mortgages Are Pooled Together into a Pass-Through