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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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