User Account

All Pages

What is the price of each share of the IO-PO Strips

Assignment Help Managerial Accounting
Reference no: EM133003235

Question - The Green Bank originates a pool of containing 100 30-year fixed-rate mortgages with loan amount of $250,000 each. All mortgages in the pool carry a rate of 6.5% with monthly payments. The servicing fee is 0.05% each month. The Green Bank would like to sell the pool to investors via IO/PO Strips. Suppose that they issue 150,000 shares of IO/PO Strips and the market interest rate is 6%.

Required -

Assume that there are no prepayment and no default, how much an investor would like to pay for each share of the IO/PO Strips?

What is the price of each share of the IO/PO Strips if there are a constant prepayment rate of 1.5% every month and no default?

What is the price of each share of the IO/PO Strips if there are a constant default rate of 1.5% every month (assuming the recovering rate is 50%) and no prepayment? Please briefly discuss your findings.

Reference no: EM133003235

Questions Cloud

Explain two low-cost ways that Hanna business idea : Suggest and explain two low-cost ways that Hanna's business idea could be tested before launching the business
What the amount of cash from the joint operation : What the amount of cash from the joint operation that A Company will recognize as it records its own contribution on January 1, 2018
Prepare the adjusting entry to record the bonds : Prepare the adjusting entry to record the bonds at fair value at December 31, 2020. The Fair Value Adjustment account has a debit balance of $1,950
Briefly discuss the appropriate treatment of each item : A company generated a customer list and brand internally, which it deems highly valuable. Briefly discuss the appropriate treatment of each item
What is the price of each share of the IO-PO Strips : What is the price of each share of the IO/PO Strips if there are a constant prepayment rate of 1.5% every month and no default
What is artificial intelligence and machine learning : Explain what is Artificial Intelligence (AI) and machine learning and how the usage of these are changing banking product distribution.
Calculate fund manager average alpha : You are an analyst for a large public pension fund and you have been assigned the task of evaluating two different external portfolio managers (Y and Z). You co
Compute portfolio return and portfolio risk : 1) Compute portfolio return and portfolio risk with the following correlation coefficients:
What is the value of the company : -A firm has an EBIT of $800,000 per year that is expected to continue in perpetuity. The unlevered cost of equity of the firm is 12 percent and the corporate ta

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Estimate the budgeted cash receipts for june

What is the direct labour budget for May and June, which includes total direct professional labour hours and costs. Estimate the budgeted cash receipts for June

  What is the investments payback period

The expected profits from a $52,000 investment are $8,000, If the firm's required payback period is four years, will it make the investment?

  Is it convenient for company to reduce the price

Commissions are 2.5% of the selling price. Is it convenient for company to reduce the price to 140 Euros and increase the sold quantity

  Evaluate the various approaches to performance measurement

Evaluate the various approaches to performance measurement and control in various types of organisations, and devise and evaluate indicators of performance.

  Journalize the february transactions for best pty ltd

The company estimates annual overhead costs will be,Journalize the February transactions and explain the meaning of each journals relate to the costing system.

  Why did franz take this step

What is meant by budget padding?  Why did Franz take this step? What is the effect of this action on shareholder value?

  What is the residual income of year investment opportunity

What is the residual income of this year's investment opportunity? This year, the company has a $300,000 investment opportunity

  What the safety stock for the pizza bottles is

What The Safety Stock for the Pizza bottles is? La Zana in Sydney's North Shore is a popular pizza place offering a variety of pizzas

  Components of cost-volume-profit analysis

Describe the components of cost-volume-profit analysis. Employ cost-volume-profit analysis and break-even analysis to make business decisions.

  Solve the accounting rate of return and payback period

To be safe, Shah wants to see if it will be able to make their money back within the 20-year life span of the factory if production

  What the amount mosbey inc needs to borrow for june

The desired ending cash balance is $49,000, and the company borrows in increments of $500 only. The amount Mosbey Inc needs to borrow for June will be

  Evaluate world airlines use of air miles

Evaluate World Airlines use of air miles as a basis for allocation. Do you think the cause-and-effect relationship is strong and suggest alternative methods toallocate the servicedepartment costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd