A Three-Class Sequential Pay CMO Has an Initial Principal Balance

A three-class sequential pay CMO has an initial principal balance of $30 million per class. In the first month,interest payments of $5 million and principal payments of $2 million are received. In the second month,Class A holders receive interest on ________ principal and Class B holders receive interest on ________ principal.

A) $30 million; $30 million
B) $28 million; $28 million
C) $27 million; $27 million
D) $28 million; $30 million
E) $30 million; $28 million

Correct Answer:

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