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1. Stratify the following Agency mortgages at a deal coupon of 4%. What are the initial pool, pass-through, and PO principal amounts, and what are the initial notional principal and coupon of the IO? (Gross): 4.10%, 4.20%, 4.30%, 4.40% (Net): 3.852%, 3.934%, 4.071%, 4.153% (Balance (mln $): 50.343, 101.435, 123.777, 40.123 (respectively)

2. If the present value of the tax shield equals the present value of the costs of financial distress, then the: A. firm is using the optimal level of debt. B. firm is paying too high an interest rate. C. firm's market value equals the value of the unlevered firm. D. firm should increase its use of debt.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93061395

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