What is the total amount of interest paid to pass-through

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In each of the following questions monthly mortgage coupon rates should be calculated by simply dividing the annual rate by 12. You should also assume that all of the securities pay monthly. You should also divide annual interest rates by 12 to get the corresponding monthly rate and assume monthly compounding when computing present values.

Question 1: (Mortgage Pass-Throughs) Consider a $400 million pass-through MBS that has just been created (so the 'seasoning' of the pass-through is equal to 0). The underlying pool of mortgages each has a maturity of 20 years and an annual mortgage coupon rate of 6%. The pass- through rate of the mortgage pool is 5%. Assuming a prepayment multiplier of 100 PSA what is the total amount of interest paid to the pass-through investors?

Reference no: EM132592307

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