Explain why you agree or disagree with the following statement When the Monte Carlo simulation methodology is used to value a RMBS, a PSA assumption is employed for all interest rate paths ...

As seen in the illustration and Exhibit 199 the collateral value of a ...

Explain why you agree or disagree with the following statement: When the Monte Carlo simulation methodology is

Question:

Explain why you agree or disagree with the following statement: “When the methodology is used to value a RMBS, a PSA assumption is employed for all interest-rate paths.”
Monte Carlo simulation
Monte Carlo simulation is a technique used to understand the impact of risk and uncertainty in financial, project management, cost, and other forecasting models. A Monte Carlo simulator helps one visualize most or all of the potential outcomes to...