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Ingenta Bank has securitized a pool of 500 interest only mortgages with and average principal of 450,000 each and 30 years to maturity. The mortgage pool pays an aggregate coupon of 3.42%. Ingenta bank sells the pool to an SPV who collects an annual servicing fee of 21bsp. The SPV then purchase GNMA insurance for 4bps per annum. Find the aggregate expected payment to the bond holders, SPV and GNMA at the end of month 4 assuming 75% PSA (all payments are made in arrears).
Recommended: Find the payment to bondholders after one year has passed (at the end of month 12) if loans are fully amortizing.
A firm has a $100 million capital budge. It is considering two projects that each cost $100 million. Project A has an IRR of 20 percent, and NPV of $9 million, and will be terminated after 1 year at a profit of $20 million, resulting in an immediate ..
Myoptic Optical is a levered no-growth firm with $1, 400, 000 debt outstanding. Firm value is $2, 277, 500. The firm's owner is currently contemplating whether to reduce its debt ratio to a more reasonable 40%. What are Myoptic Optical's current stoc..
Heidi borrowed $35,000 from Leopold Mortgage Corp. and signed a promissory note secured by a deed of trust on the land she owned. The note provided for interest at "30% over prime to be adjusted monthly." Is a note providing for a variable amount of ..
A company's 5-year bonds are yielding 7.8% per year. Treasury bonds with the same maturity are yielding 4.9% per year, and the real risk-free rate (r*) is 2.1%. The average inflation premium is 2.4%, and the maturity risk premium is estimated to be 0..
Which of the following statements regarding bonds is/are true?
You have had a 30yr FA FRM at 10% for 5 years. The original principal was 1,000,000. You are considering a cash-out refi into a 15-year mortgage at 7.5%. The old mortgage has a prepay penalty of 3% if payoff occurs before year 8. Assume all fees will..
What is the market value of a standard interest rate swap when it is created and why does the market value of the swap change over time? Identify two financial intermediaries? What are there functions? What are their major roles in the economy? Discu..
What are the pros and cons of HCA and CCA in the context of providing relevant and reliable financial information? Calculate the firm's 2007 financial ratios and fill in the table above.
You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent. Debt: 10,000 7.1 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semian..
Suppose you purchase eight call contracts on Macron Technology stock. The strike price is $60, and the premium is $3.5. If, at expiration, the stock is selling for $67 per share, what are your call options worth? What is your net profit?
Which of the following is correct for a bond priced at $1,200 that has 8 years remaining until maturity, and a 10% coupon with semiannual payments?
Atlantis Fisheries issues zero coupon bonds on the market at a price of $319 per bond. Each bond has a face value of $1,000 payable at maturity in 11 years. What is the yield to maturity for these bonds?
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