What is the maximum cap rate on the floater class

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Finally, imagine that $10,000,000 of this CMO was set aside to form floater and inverse floater securities that will generate payments based on the WAC 5% on the pool at origination. If the payment rule to the floater class is LIBOR+60bp and $6 million is the principal balance allocated to the floater class, answer the following questions:

A. What is the maximum cap rate on the floater class?

B. If LIBOR is currently at 3%, what is the payment to the inverse floater class?

C. If LIBOR is currently at 10%, what is the payment to the floater class?

Reference no: EM131178859

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