What is the market value of the mortgage

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Question - Overseas bank is pooling 50 similar and fully amortized mortgages into a pass-through security. The face value of each mortgage is 100,000 paying 180 monthly interest and principal payments at a fixed rate of 9 percent per annum.

What is the market (present) value of the mortgage pass-through to the investor if the interest rates on this risk category of securities decrease to 7 percent (Note that investors receive payments net of the 50 basis points servicing fees)?

A. $4,892,200

B. $5,000,000

C. $5,152,189

D. $5,477,910

E. $5,675,005

Reference no: EM132208255

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