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

question 92

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,immediately after origination,interest rates increase to 8.25 percent per annum?

• A)$15,000,000.
• B)$14,650,591.
• C)$14,000,000.
• D)$15,115,493.

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Definitions:

Duty Of Loyalty

A legal obligation of individuals in certain positions to act in the best interests of another party or entity, often seen in corporate governance and employment.

Duty Of Care

A legal obligation to avoid causing harm and to act with a standard of reasonable care towards others.

Violation

An act of breaking or failing to comply with a set of rules or laws.

Profit Maximization

The process or strategy aimed at increasing a business's net profits to the highest possible level, often by increasing revenue, reducing costs, or both.