Question

A mortgage company is issuing a CMO with three tranches, with the principal and coupon rate given in the table below. When issued, the weighted average coupon on the CMO will be:


Tranche Principal Coupon Rate
A $ 40,000,000 9.25 %
B 30,000,000 10.00 %
Z 30,000,000 11.00 %

A) 9.25%

B) 10.00%

C) 10.08%

D) 11.00%

Answer

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