Overseas Bank Is Pooling 50 Similar and Fully Amortized Mortgages

question 109

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 at the end of the second month,what is the weighted average life of the mortgage pool?

• A)2.10 months.
• B)2 months.
• C)1.997 months.
• D)1.95 months.

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Definitions:

Classical Conditioning

A learning process in which a biologically potent stimulus is paired with a previously neutral stimulus to elicit a response.

Personality Traits

Enduring characteristics that describe an individual's behavior, mindset, and emotional patterns.

Substance Abuse

The harmful or hazardous use of psychoactive substances, including alcohol and illicit drugs, leading to addiction or other types of harm.

Alcohol Preference

An individual's tendency to choose alcoholic beverages over non-alcoholic ones, often used in studies of addiction and behavior.