Question: Describe how the schedule for a PAC tranche is created
Describe how the schedule for a PAC tranche is created.
Relevant QuestionsAnswer the below questions. a. Why is it necessary for a nonagency mortgage-backed security to have credit enhancement? b. Who determines the amount of credit enhancement needed? What is meant by the prospectus prepayment curve? What is the concern with the inclusion of fixed-rate mortgage loans in the collateral pool when the liabilities are floating rate? Why was the PSA Standard Default curve introduced? How does the analysis of a commercial mortgage-backed security differ from that of a residential mortgage-backed security?
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