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Business, 16.04.2021 03:00 torlajap017

The Green Mortgage Company has originated a pool containing 75 ten-year fixed interest rate mortgages wit an average balance of $100,000 each. All mortgages in the pool carry a coupon of 12- percent. (For simplicity, assume that all mortgage payments are made annually at 12% interest). Green would now like to sell the pool to FNMA. a. Assuming a constant annual prepayment rate of 10-percent (for simplicity, assume that prepayments are based on the pool balance at the end of each year), what will be the price that Green should obtain on the date of issuance if market interest rates were (1) 11 percent

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