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Interest paid to the floater tranche investors

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Reference no: EM133113991

BOA issues $400m in CMO. 50% of the issue is floater tranche with index = LIBOR (currently 1%) and margin = 2%. The remaining 50% is inverse floater tranche that is designed to keep the total cost of financing constant. The next year LIBOR goes up to 3%. What would be the interest paid to the floater tranche investors?

Reference no: EM133113991

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