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

question 58

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.
-For the first monthly payment, what portion is principal and what portion is interest?

• A)$100,000 principal and $10,065 interest.
• B)$12,000 interest and no principal.
• C)$100,000 interest and no principal.
• D)$100,000 interest and $10,065 principal.
• E)$10,000 interest and $2,000 principal.

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Definitions:

Cartoonists' Labor

The creative and artistic work performed by cartoonists, including drawing and storyboarding.

Production Function

A mathematical representation that details how inputs like labor and capital are transformed into outputs, the goods or services produced by a firm.

Cartoonists' Labor

The work or efforts put in by cartoonists in creating animated or static cartoons.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a particular good.