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

question 48

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.
-If at the end of the first year, the trustee of the CMO receives total cash flows of $10 million, how are they distributed to Tranche A and B, respectively?

• A)$5,558,628; $4,441,372.
• B)$4,441,372; $5,558,868.
• C)$4,000,000; $6,000,000.
• D)$6,000,000; $4,000,000.
• E)$5,558,628; $4,000,000.

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Definitions:

Sex Hormones

Chemical substances produced by the body that regulate the development and function of reproductive organs and secondary sex characteristics.

Testosterone

A primary male sex hormone responsible for the development of male physical characteristics but is also present in females in smaller amounts.

Testes Surgically Removed

The medical procedure of castration, where the testicles are removed, often affecting hormone production and reproductive capabilities.

Sexual Dysfunction

A problem that consistently impairs sexual arousal or functioning at any point in the sexual response cycle.