B$.$ Mighty Alpha Corp. is considering issuing the following two CMO structures:

Structure I:

Tranche Par amount Coupon rate

A $$150$ million $6\mathrm{.}50\%$

B $100$ million $6\mathrm{.}75\%$

C $200$ million $7\mathrm{.}25\%$

D $150$ million $7\mathrm{.}75\%$

E $100$ million $8\mathrm{.}00\%$

F $500$ million $8\mathrm{.}50\%$

Tranches A$-$E are a sequence of PAC I and F is the support tranche.

Structure II:

Tranche Par amount Coupon rate

A $$150$ million $6\mathrm{.}50\%$

B $100$ million $6\mathrm{.}75\%$

C $200$ million $7\mathrm{.}25\%$

D $150$ million $7\mathrm{.}75\%$

E $100$ million $8\mathrm{.}00\%$

F $200$ million $8\mathrm{.}25\%$

G $300$ million $???$

Trances A$-$E are a sequence of PAC I, F is a PAC II$,$ and G is a support trances without a schedule.

a$.$ In Structure II tranche G is created from tranche F in Structure I. What is the coupon rate for tranche G assuming that the combined coupon rate for tranches F and G in Structure II should be $8\mathrm{.}5\%?(3$ marks$)$

b$.$ What is the effect on the value and average life of tranches A$-$E by including the PAC II in Structure II$?(1$ mark$)$

c$.$ What is the difference in the average life variability of tranche G in Structure II and tranche F in Structure I? $(1$ mark$)$