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.
-If the entire mortgage pool is repaid after the second month, what is the second month's interest and principal payments?
A)$37,441 interest and $13,275 principal.
B)$13,275 principal and $37,441 interest.
C)$13,312 interest and $4,986,786 principal.
D)$4,986,786 interest and $37401 interest.
E)$37,401 interest and $4,986,786 principal.

Question

Quizplus · Accepted Answer

The interest for the second month is calculated on the remaining balance after the first month's payment. The principal for the second month is the remaining balance after the second month's interest is paid.

Overseas Bank Is Pooling 50 Similar and Fully Amortized Mortgages