1. Open Excel. 2. Go to Tools. Select Add-Ins. A dialog box will appear. 3. Check the box next to Solver Add-in. Excel will enable the Solver function. You need to do this only once. Next time you open Excel, Solver will have already been enabled. Assignment You are given the following information about a pool of MBS. The total loan size is $1,000,000, and currently, the MBSs are traded at a market price of $800,000. Your problem is to price the MBSs by finding the OAS. Parameters The total loan size is $1,000,000, with a weighted average coupon of 6% and 30 years of maturity. Prepayments are estimated to follow the PSA standard. Initially, you are interested in the OAS associated with 100%PSA. a Interest rates are assumed to follow a random process without drifts (you need to make a few more assumptions about how interest rate changes can be predicted). Time periods are denominated on an annual basis. The current interest rate is 3%. To ease your computation, you only need to simulate the interest rate process 20 times using Excel. Compute the average simulated value for k%PSA, with k=50%, 100%, 150%, and 200%. In each case, find the OAS. Your task Fill out this table and discuss your findings with no more than 5 sentences. OAS k 0.50 1.00 1.50 2.00 1. Open Excel. 2. Go to Tools. Select Add-Ins. A dialog box will appear. 3. Check the box next to Solver Add-in. Excel will enable the Solver function. You need to do this only once. Next time you open Excel, Solver will have already been enabled. Assignment You are given the following information about a pool of MBS. The total loan size is $1,000,000, and currently, the MBSs are traded at a market price of $800,000. Your problem is to price the MBSs by finding the OAS. Parameters The total loan size is $1,000,000, with a weighted average coupon of 6% and 30 years of maturity. Prepayments are estimated to follow the PSA standard. Initially, you are interested in the OAS associated with 100%PSA. a Interest rates are assumed to follow a random process without drifts (you need to make a few more assumptions about how interest rate changes can be predicted). Time periods are denominated on an annual basis. The current interest rate is 3%. To ease your computation, you only need to simulate the interest rate process 20 times using Excel. Compute the average simulated value for k%PSA, with k=50%, 100%, 150%, and 200%. In each case, find the OAS. Your task Fill out this table and discuss your findings with no more than 5 sentences. OAS k 0.50 1.00 1.50 2.00