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

question 101

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.
-What is the principal outstanding on Tranche A and Tranche B after the end of year payment in the previous question?

• A) $110 million on Tranche A and $90 million on Tranche B
• B) $95 million on Tranche A and $90 million on Tranche B.
• C) $106.8 million on Tranche A and $90 million on Tranche B.
• D) $110 million on Tranche A and $86.8 million on Tranche B.
• E) $108.4 million on Tranche A and $88.4 million on Tranche B.