What does a conditional prepayment rate of 8% mean?
Answer to relevant QuestionsIndicate whether you agree or disagree with the following statement: “The PSA prepayment benchmark is a model for forecasting prepayments for a pass-through security.” What is the S-curve for prepayments? Explain the reason for the shape. What are the two types of private–label MBS? Explain the role of a support bond in a CMO structure. Consider the following CMO structure backed by 8% collateral: Tranche Par Amount (in millions) Coupon Rate (%) A $300 6.50% B $250 6.75% C $200 7.25% D $250 7.75% Suppose that a client wants a notional IO with ...
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