Page 77 - FINAL CFA SLIDES DECEMBER 2018 DAY 14
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Example: Calculating principal payments –
Part 2, p.85: Calculate the principal payments, Session Unit 15:
ending principal balance, and interest 53. Introduction To Asset-Backed Securities
payments to each tranche in the 185th month,
assuming the principal balance of Tranche A is
now $405,694.
Answer:
From Figure 4 we see that the total month 185 principal payment is $536,542 and the total interest
payment is $357,040. Tranche A receives principal payments sufficient to pay off its balance as well as its
share of the interest. Tranche B receives the remaining principal as well as its interest.
tanties
