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

question 12

Multiple Choice

The following information is for a collateralized mortgage obligation (CMO) .Tranche A has a face value of $50 million and pays 6 percent annually.Tranche B has a face value of $50 million and pays 8 percent annually.All mortgages have maturities of 30 years.

What are the annual payments promised to Tranche A and Tranche B,respectively,assuming no prepayments and non-amortization?

• A)$3,632,446;$4,000,000.
• B)$4,000,000;$3,000,000.
• C)$3,000,000;$4,000,000.
• D)$3,632,446;$4,441,372.

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Definitions:

Theory of Mind

The cognitive ability to understand that others have beliefs, desires, intentions, and perspectives that are different from one's own.

Older Siblings

The child or children in a family who were born before other siblings, often taking on leadership roles and influencing the younger siblings' behavior and development.

Prefrontal Cortex

The part of the brain located at the front of the frontal lobe, important in decision making, cognitive control, social behavior, and emotional regulation.

Limbic System

A complex system in the brain involved in emotions, memories, and arousal (or stimulation).