Price of loans of equivalent risk and maturity increases

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A $500,000 loan requires monthly payments for 20 years. The annual interest rate on the loan is 3%. Immediately after the loan has been finalized, the price of loans of equivalent risk and maturity increases by 50 basis points (3.0% to 3.5%). How much could the bank obtain if they decided to immediately securitize the loan (buyer is buying the cash flows at the market rate). Ignore transaction costs.

Reference no: EM13907216

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