A Three-Class Sequential Pay CMO Has an Initial Principal Balance

question 54

Multiple Choice

A three-class sequential pay CMO has an initial principal balance of $30 million per class. In the first month,interest payments of $5 million and principal payments of $2 million are received. In the second month,Class A holders receive interest on ________ principal and Class B holders receive interest on ________ principal.

• A)$30 million; $30 million
• B)$28 million; $28 million
• C)$27 million; $27 million
• D)$28 million; $30 million
• E)$30 million; $28 million

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Definitions:

Resources

Assets, materials, and human capabilities used to produce goods and services in an economy.

Final Goods

Refers to products that have completed the manufacturing process and are purchased by consumers without further processing.

Margin

The difference between the cost of a product or service and its selling price.

Economics

The efficient allocation of the scarce means of production toward the satisfaction of human wants.