Please answer clearly and show calculation steps if needed.

Question 2 (III marks) The Super Fund owns the following two 30-year original maturity mortgage-backed securities shown in the table below. The md uses the [0-year US Treasury yield as a relative measure to gauge the level of current 30-year home mortgage rates. Over the past four years, the 10-year US Treasury yield has declined below 5.50% three times, subsequently rising above 6.50 ".43 each time. The 10-year US treasury yield is currently at 6.50%. Weighted Average Current Month Issue Coumn Maturity {months} M Q lMBS-l 7.50% 3-55 100 5 LIBS-2 7.50% 260 100 12 (a) Analyse the effect on prepayments of each of the following three factors: } coupon rate of the mortgage (ii) age of the mortgage {iii} seasonality