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.
-If at the end of the first year, the trustee of the CMO receives total cash flows of $10 million, how are they distributed to Tranche A and B, respectively?
A)$5,558,628; $4,441,372.
B)$4,441,372; $5,558,868.
C)$4,000,000; $6,000,000.
D)$6,000,000; $4,000,000.
E)$5,558,628; $4,000,000.

Question

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The Answer of 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.
-If at the end of the first year, the trustee of the CMO receives total cash flows of $10 million, how are they distributed to Tranche A and B, respectively?
A)$5,558,628; $4,441,372.
B)$4,441,372; $5,558,868.
C)$4,000,000; $6,000,000.
D)$6,000,000; $4,000,000.
E)$5,558,628; $4,000,000.

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