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. What is the present value of the mortgage pass-through if the entire pool is repaid after two months and there is no change in interest rates?
A)$14,989,935.
B)$15,089,868.
C)$15,000,000.
D)$15,110,065.
E)$14,889,935.

Question

Quizplus · Accepted Answer

The present value of the mortgage pass-through is the sum of the principal amounts of all mortgages, which is $150,000 * 100 = $15,000,000. Since the entire pool is repaid after two months with no change in interest rates, the present value remains the same as the initial principal amount.

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