Assumptions The collateral of the CDO: To finance the senior tranche,
{"Image DocumentName": "Assumptions The collateral of the CDO: To finance the senior tranche,", "Image ImageDescription": "bonds that all mature in 10 years. The coupon rate for every bond is a fixed rate. The fixed rate at the time of purchase of cash bond is the 10 year treasury plus 400 basis points. To finance the senior tranche, collateral manager enters into an interest-rate swap with another party with a notional principal of  80 million in which it agrees to do the following: Pay a fixed rate each year equal to the 10-year Treasury rate plus 100 basis points. Receive LIBOR. Ch14-15.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}