Bank of England purchases a pool of GNMA bonds with face value of $500M and time to maturity of 30 years. The bonds are securitized in a CMO. The Class A bond has total principal of $200M and pays an 8% coupon. The Class B bond has total principal of $150M and pays a coupon of 5%. The Class C share has total principal of $150M and a coupon of 3%.
A. Find the aggregate coupon payments to bond holders of each bond class. For this part, assume the bonds pay an annual coupon.
B. Assume the loans are interest only loans. Find the payment bonds holders of each class after 7 years have passed. For this part, assume the bonds pay semiannual coupons and there is no prepayment risk.
C. After 12 years $231.5M of principal has been repaid (includes both prepayments and scheduled principal payments). Find the aggregate coupon payments to bond holders of each bond class. For this part, assume bonds are fully amortizing.