Question: Describe the cash flow of a mortgage pass through security
Describe the cash flow of a mortgage pass-through security.
Answer to relevant QuestionsAnswer the below questions. (a) What are the WAC and WAM of a pass-through security? (b) After origination of a mortgage-backed security, the WAM changes. What measures are used by Fannie Mae and Freddie Mac to describe the ...What was the motivation for the creation of PAC bonds? Suppose that for the first four years of a CMO, prepayments are well within the initial PAC collar. What will happen to the effective upper collar? Answer the below questions. (a) “By creating a CMO, an issuer eliminates the prepayment risk associated with the underlying mortgages.” Do you agree with this statement? (b) Wall Street often refers to CMOs as ...Why is a shifting interest mechanism included in a securitization where the collateral is residential mortgage loans?
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