One Hundred Identical Mortgages Are Pooled Together into a Pass-Through

question 47

Multiple Choice

One hundred identical mortgages are pooled together into a pass-through security.Each mortgage has a $150,000 principal, a fixed annual interest rate of 8 percent (paid monthly) , and is fully amortized over a term of 30 years. What is the present value of the mortgage pass-through if the entire pool is repaid after two months and there is no change in interest rates?

• A)$14,989,935.
• B)$15,089,868.
• C)$15,000,000.
• D)$15,110,065.
• E)$14,889,935.

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Definitions:

Deadweight Loss

A decline in economic efficiency resulting from the failure to achieve free market equilibrium for a good or service.

Total Revenue

The total amount of money a company generates from its business activities, often calculated by multiplying the price of goods or services by the quantity sold.

Policymaker

An individual or group responsible for making decisions and policies that affect a country's economy, society, or institution.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved due to market inefficiencies or interventions.