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How much residual interest available for an io tranche

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Question: In a certain CMBS issue, $500 million of senior securities and $100 million of mezzanine securities are issued. The coupon on the senior securities is 7%, and that on the mezzanine is 9%. The average contractual interest rate in the underlying mortgage pool is 10%. Assuming annual interest payments and no par value retired or defaulted, how much residual interest will be available for an IO tranche from these two par-valued tranches at the end of the first year?

Reference no: EM131735579

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