Overseas Bank Is Pooling 50 Similar and Fully Amortized Mortgages

question 55

Multiple Choice

Overseas bank is pooling 50 similar and fully amortized mortgages into a pass-through security.The face value of each mortgage is $100,000 paying 180 monthly interest and principal payments at a fixed rate of 9 percent per annum. If the entire mortgage pool is repaid after the second month, what is the second month's interest and principal payments?

• A)$37,441 interest and $13,275 principal.
• B)$13,275 principal and $37,441 interest.
• C)$13,312 interest and $4,986,786 principal.
• D)$4,986,786 interest and $37401 interest.
• E)$37,401 interest and $4,986,786 principal.

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Definitions:

Obligations

Legal or moral responsibilities or duties that an individual or entity is bound to perform or fulfill.

Third Parties

Individuals or entities that are not directly involved in a contract or transaction but may be affected by it or have an interest in its outcome.

Partnership Act

Legislation that outlines the laws governing business partnerships, including the rights, responsibilities, and liabilities of partners.

Liabilities

Financial obligations or debts a company or person has.