A Collateralized Mortgage Obligation (CMO)principal balance is $1,000,000,000. The passthru rate is 5.35%. The Weighted AverageCoupon rate is 6.35%. The weighted AverageMonths is 350. The PSA is 90.3-What is the month 1 CMO total cash flowfrom pass thru interest, scheduled principaland prepaid principal?1-What is the total prepaid principal in month30 of the Weighted Average Loan Age?2- Within how many months from thecreation of the CMÓ will tranche C principalbe totally paid?

Solution: (3). Answer is $2,654,087 The month 1 CMO total cash flow from pass thru interest,…

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A Collateralized Mortgage Obligation (CMO) principal balance is $1,000,000,000. The pass

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

A Collateralized Mortgage Obligation (CMO)
principal balance is $1,000,000,000. The pass
thru rate is 5.35%. The Weighted Average
Coupon rate is 6.35%. The weighted Average
Months is 350. The PSA is 90.
3-What is the month 1 CMO total cash flow
from pass thru interest, scheduled principal
and prepaid principal?
1-What is the total prepaid principal in month
30 of the Weighted Average Loan Age?
2- Within how many months from the
creation of the CMÓ will tranche C principal
be totally paid?

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