Amount available to buy financial guarantee

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Reference no: EM1348718

Amount Available to Buy Financial Guarantee

If a trust is established to securitize $100 million in auto loans that paid 13 percent interest and the average rate paid on the tranches issued was 10 percent, whereas financial guarantees to protect against default on the loans cost 1.5 percent, how much money would the creator of the trust have available to pay for loan servicing and profits if the financial guarantee was purchased?

Reference no: EM1348718

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