The following information is for a collateralized mortgage obligation (CMO).Tranche A has a face value of $50 million and pays 6 percent annually.Tranche B has a face value of $50 million and pays 8 percent annually.All mortgages have maturities of 30 years.

What are the annual payments promised to Tranche A and Tranche B,respectively,assuming no prepayments and non-amortization?
A)$3,632,446;$4,000,000.
B)$4,000,000;$3,000,000.
C)$3,000,000;$4,000,000.
D)$3,632,446;$4,441,372.

Question

The following information is for a collateralized mortgage obligation (CMO) .Tranche A has a face value of $50 million and pays 6 percent annually.Tranche B has a face value of $50 million and pays 8 percent annually.All mortgages have maturities of 30 years.

What are the annual payments promised to Tranche A and Tranche B,respectively,assuming no prepayments and non-amortization?

What are the annual payments promised to Tranche A and Tranche B,respectively,assuming no prepayments and non-amortization?
A)$3,632,446;$4,000,000.
B)$4,000,000;$3,000,000.
C)$3,000,000;$4,000,000.
D)$3,632,446;$4,441,372.

Quizplus · Accepted Answer

The annual payment for Tranche A is 6% of $50 million, which is $3,000,000. The annual payment for Tranche B is 8% of $50 million, which is $4,000,000.

The Following Information Is for a Collateralized Mortgage Obligation (CMO)