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.
-If the entire mortgage pool is repaid after the second month, what is the second month's (liquidating) principal and interest payments?
A)$99,933 interest and $14,989,935 principal.
B)$100,000 interest and $10,065 principal.
C)$100,000 interest and $15,000,000 principal.
D)$99,933 principal and $14,989,935 interest.
E)$12,000 interest and $138,000 principal.

Question

Quizplus · Accepted Answer

The interest for the second month is calculated as 0.08/12 * $150,000 * 100 = $99,933. The principal is the remaining balance after the second month's payment, which is $14,989,935.

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