The Following Information Is for a Collateralized Mortgage Obligation (CMO)

question 9

Multiple Choice

The following information is for a collateralized mortgage obligation (CMO) .Tranche A has a face value of $110 million and pays 5 percent annually.Tranche B has a face value of $90 million and pays 7 percent annually.

If at the end of the first year,the CMO trustee receives total cash flows of $15 million,how are they distributed?

• A)$7.5 million to Tranche A and $7.5 million to Tranche B.
• B)$15 million to Tranche A and nothing to Tranche B.
• C)$5.5 million to Tranche A and $9.5 million to Tranche B.
• D)$8.7 million to Tranche A and $6.3 million to Tranche B.
• E)$7.1 million to Tranche A and $7.9 million to Tranche B.

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Definitions:

Access Status Bar

A feature in software that displays important information about the current state of the program or document at the bottom of the window.

Form View

A perspective or mode in database and form applications that allows users to view, enter, or edit data in a structured format.

Validation Rules

Criteria or constraints applied to data entering a database to ensure accuracy, consistency, and reliability of the data.

Entity Integrity

A concept in database management ensuring that each table has a primary key and that this key uniquely identifies each row in the table.