dirtydirty Wrote: ------------------------------------------------------- > then why have the no, they go thru mps option lol They want to make sure you memorized the wording in CFAI text.
IOs don’t increase when interest rates increase? I think thats what it says in the curriculum.
That whole afternoon I felt like that donkey on clerks 2
IO’s increase when interest rates rise (at low rates when mortgage prepayment is affected) and then start to decrease when interest rates continue to rise. The price / interest rate curve is like an upside-down parabola leaning to the right…
McLeod81 Wrote: ------------------------------------------------------- > Slash Wrote: > -------------------------------------------------- > ----- > > was one answer PAC A gets 32000 after C changes > to > > an accrual (it’s a sequential pay structure > > anyway)? seemed really obvious unless i’m > mission > > something > > > I thought that too, felt like a trick question. > But 32k is right. I was going to go with this at first, but ended up changing the answer. I though the interest going to the accurual tranche was going to be added to the first sequencal pay tranche. The outstanding principal of was 105M * 7%. That is the yearly interest so you have to divide it by 12 to get the monthly amount and then add it to the 32K.
Sh!t.
ohhhh eff thats why, forgot to change the 7% to monthly…
jpm351 Wrote: ------------------------------------------------------- > what was the payment answer? I thought that it > was the 36k, plus the new accrual interest so it > was b 36417… anyone? Yep, I got that too and felt 99.9% certain it was correct.
ah well score 1 for the bad guys
bhill020 Wrote: ------------------------------------------------------- > jpm351 Wrote: > -------------------------------------------------- > ----- > > what was the payment answer? I thought that it > > was the 36k, plus the new accrual interest so > it > > was b 36417… anyone? > > > Yep, I got that too and felt 99.9% certain it was > correct. 100% sure it should be A.
I guessed it was 40750…had no clue on how to do it…it had to be either that or 47750…but since CFAI had too much of a D bias earlier, i gave it the C…
lxwqh Wrote: ------------------------------------------------------- > bhill020 Wrote: > -------------------------------------------------- > ----- > > jpm351 Wrote: > > > -------------------------------------------------- > > > ----- > > > what was the payment answer? I thought that > it > > > was the 36k, plus the new accrual interest so > > it > > > was b 36417… anyone? > > > > > > Yep, I got that too and felt 99.9% certain it > was > > correct. > 100% sure it should be A. What’s A, 32,000? Was the question “How much principal was paid” or “How much was paid”??
should be 3200 + 150000/12*0.07 = 4075? not sure about the real numbers… but something like that…
THe question 100% said how much principal was paid, however the CFAI text says you add the accrual interest to “principal” payments to the early tranches
I don’t see what you are trying to differentiate between Lance.
Yeah, so wouldn’t the total amount paid be 4075 with only 3200 of that actually being principal?
Basically, the question gives you the chart with the scheduled principal payments for tranche A. But then, if trance C changes to an accrual tranche, the interest that should have been paid to tranche C, will actually be added to the “principal” of trance A. I missed the question, but after reading the text afterwards it’s definitely 3200+(interest owed to trance C)
Lance, That would increase the life of tranche A, which doesn’t make sense. Can you point me to a page number?
That would decrease the the life of A if they are getting their principal payments faster. I can’t point to a page unfortunately. I’m actually on vacation in Myrtle beach, and i swore I wouldn’t look at this but I can’t help it damnit
I’m confused - I thought that the question was what the principal payment of A was? Does the accrued interest from C count as additional principal because it is capitalized or is it just more interest that happens to pay them down??