CFAI: Reading 55; Page 422; Question # 28 I am not clear on how they calculated notional amount for the notional IO tranche. Can someone please explain to me?

calculate amount of interest that would be owed. divide that by the interest rate. get the notional principal. post the problem here - do not have the text on hand.

thanks a lot… I got it. I think structured IO Tranches is not covered in Schweser, I noticed when I took EOC questions test from CFAI material.

Notional Amount for an x% IO = (Original Tranche Amount * Excess Interest) / x%

jdane416 Wrote: ------------------------------------------------------- > Notional Amount for an x% IO = (Original Tranche > Amount * Excess Interest) / x% Could you please quote a CFAI page number where you got that from? Can’t seem to find it in the low 400s, thanks!

Nevermind found it on page 393