Explain how, given the cash flow on the simulated interest-rate paths, the average life of a RMBS is determined.
Answer to relevant QuestionsSuppose that a support bond is being analyzed using the Monte Carlo simulation methodology. The theoretical value using 1,500 interest-rate paths is 88. The range for the path present values is a low of 50 and a high of 115. ...Explain how the number of interest-rate paths used in the Monte Carlo simulation methodology is determined. On July 1, 2013, the FHLMC 30-Year Generic 4% 2012 was analyzed using the Monte Carlo valuation model of FactSet. At the time of the analysis the security’s price was 104.644 with accrued interest of 0.300 (per $100 par ...In the October 26, 1992, prospectus summary of the Staples 5% convertible subordinated debentures due 1999, the offering stated: “Convertible into Common Stock at a conversion price of $45 per share . . .” If the par ...Upon exercise of the conversion option for a convertible bond, all issuers must exchange shares of stock for the bond. Explain whether you agree or disagree.
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