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.

For the first monthly payment,what portion is principal and what portion is interest?
A)$100,000 principal and $10,065 interest.
B)$12,000 interest and no principal.
C)$100,000 interest and no principal.
D)$100,000 interest and $10,065 principal.

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.

For the first monthly payment,what portion is principal and what portion is interest?

For the first monthly payment,what portion is principal and what portion is interest?
A)$100,000 principal and $10,065 interest.
B)$12,000 interest and no principal.
C)$100,000 interest and no principal.
D)$100,000 interest and $10,065 principal.

Quizplus · Accepted Answer

Accrued interest first month: $15,000,000 * (0.08 ÷ 12) = $100,000.
Payment - Interest = Principal
110,065 - 100,000 = 10,065.

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