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Question
One hundred identical mortgages are pooled together into a pass-through security. Each mortgage has a $150,000 principal, a fixed annual interest rate of 8 percent (paid monthly), and is fully amortized over a term of 30 years.
For the first monthly payment, what portion is principal and what portion is interest?
A. $100,000 principal and $10,065 interest.
B. $12,000 interest and no principal.
C. $100,000 interest and no principal.
D. $100,000 interest and $10,065 principal.
E. $10,000 interest and $2,000 principal.
Answer
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