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

question 110

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.

If the entire mortgage pool is repaid after the second month,what is the second month's (liquidating) principal and interest payments?

• A)$99,933 interest and $14,989,935 principal.
• B)$100,000 interest and $10,065 principal.
• C)$100,000 interest and $15,000,000 principal.
• D)$99,933 principal and $14,989,935 interest.

---

Definitions:

Money Supply

The money supply is the total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Money Supply

is the total amount of monetary assets available in an economy at any given time.

Bond Sale

A bond sale involves the issuance of bonds by an entity to raise capital, where buyers are essentially loaning money to the issuer for a predetermined time period, with the promise of interest payments.

Federal Reserve

The central banking system of the United States, which regulates the U.S. monetary and financial system.