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

question 35

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 principals outstanding on Tranches A and B, respectively, after the CMO distributes the $10 million of cash flows?

• A)$50 million; $47 million.
• B)$47 million; $50 million.
• C)$48 million; $48 million.
• D)$50 million; $48 million.
• E)$50 million; $50 million.

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