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

question 43

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 weighted average life of the above mortgage pool?

• A)30 years.
• B)2 months.
• C)1.998 months.
• D)1 month.

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Definitions:

Cost Effective

An approach or method that achieves the desired outcome without excessive expenditure, ensuring optimal use of resources.

Drug Legalization

The process of removing legal prohibitions against drugs, allowing them to be legally produced, sold, and used under regulated conditions.

Material Success

The accumulation of wealth and physical possessions that are often used as a measure of a person's or organization's achievement.

Strain Theory

Holds that people may turn to deviance when they experience strain. Strain results when a culture teaches people the value of material success and society fails to provide enough legitimate opportunities for everyone to succeed.