Suppose you own 15 of pass-through mortgage backed


Suppose you own 15% of pass-through mortgage backed securities backed by a mortgage pool of 500 mortgage loans. Each loan is a 30-year, fixed rate, constant payment mortgage loan with 8% mortgage rate and a $200,000 initial balance.

a. How much do you expect to receive from the pool at the end of the first month, assuming there is no prepayment?

b. Next month, suppose 200 loans are prepaid. How much will you receive from the pool?

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Financial Management: Suppose you own 15 of pass-through mortgage backed
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