Overseas bank is pooling 50 similar and fully amortized mortgages into a pass-through security.The face value of each mortgage is $100,000 paying 180 monthly interest and principal payments at a fixed rate of 9 percent per annum.

For the first monthly payment,what are the interest and principal portions of the payment?
A)$37,500 principal and $13,213 principal.
B)$37,500 interest and $13,213 principal.
C)$37,500 principal and $7,809 interest.
D)$37,500 interest and $7,809 principal.

Question

Overseas bank is pooling 50 similar and fully amortized mortgages into a pass-through security.The face value of each mortgage is $100,000 paying 180 monthly interest and principal payments at a fixed rate of 9 percent per annum.

For the first monthly payment,what are the interest and principal portions of the payment?

For the first monthly payment,what are the interest and principal portions of the payment?
A)$37,500 principal and $13,213 principal.
B)$37,500 interest and $13,213 principal.
C)$37,500 principal and $7,809 interest.
D)$37,500 interest and $7,809 principal.

Quizplus · Accepted Answer

First month interest: 5,000,000 * (0.09 ÷ 12) = 37,500
First months principal: PMT - interest = 50,713 - 37,500 = $13,213.

Overseas Bank Is Pooling 50 Similar and Fully Amortized Mortgages