Which statement is wrong about the PSA model for prepayment?The prepayment speed of a specific mortgage pool is affected by coupon level, age of mortgage pool, assumability, etc.The model assumes a maximum annual prepayment rate of 8%. The model assumes the prepayment rate levels off after 30 months.A specific mortgage pool could have a prepayment speed that is higher or lower than the standard PSA.
Which statement is wrong about the PSA model for prepayment?The prepayment speed of a specific mortgage pool is affected by coupon level, age of mortgage pool, assumability, etc.The model assumes a maximum annual prepayment rate of 8%. The model assumes the prepayment rate levels off after 30 months.A specific mortgage pool could have a prepayment speed that is higher or lower than the standard PSA.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Which statement is wrong about the PSA model for prepayment?The prepayment speed of a specific
mortgage pool is affected by coupon level, age of mortgage pool, assumability, etc.The model assumes a
maximum annual prepayment rate of 8%. The model assumes the prepayment rate levels off after 30
months.A specific mortgage pool could have a prepayment speed that is higher or lower than the standard
PSA.
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