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.

If the entire mortgage pool is repaid after the second month,what is the second month's (liquidating)principal and interest payments?
A)$99,933 interest and $14,989,935 principal.
B)$100,000 interest and $10,065 principal.
C)$100,000 interest and $15,000,000 principal.
D)$99,933 principal and $14,989,935 interest.

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.

If the entire mortgage pool is repaid after the second month,what is the second month's (liquidating)principal and interest payments?
A)$99,933 interest and $14,989,935 principal.
B)$100,000 interest and $10,065 principal.
C)$100,000 interest and $15,000,000 principal.
D)$99,933 principal and $14,989,935 interest.

Quizplus · Accepted Answer

The second month's interest is calculated on the remaining principal after the first month's payment. The principal for each mortgage is $150,000, so for 100 mortgages, it's $15,000,000. The interest for the second month is approximately $99,933, and the remaining principal is $14,989,935.

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