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Final exam fixed income 2.docx

9 Pages
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Department
Administration
Course Code
ADM3351
Professor
All

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Final exam fixed incomeQuestion 1A 65 passthrough rate 30year mortgagepass throught security is already seasoned with a weighted average maturity WAM of 332 motnhs left The current outstanding balance of 200 000 000 ad the weighted average coupon WAC rate is 8 The interest rates are quoted as annual percentage rate APR based on monthly compounding assumption Assume that the prepayment rate is 150 PSAaCalculate the total cash flow of the security to the investors for the next 2 motnhs Fill out the table on the next page15 pointsbHome owners do not want to be locked in high mortgage rates Briefly explain why financial institution are unwilling to offer fixed rate mortgage for long term eg 30 years and how this problem has been solved by the federally sponsored agencies such as Fannie Mae and Freddie Mac5 points MonthOutstand CPRSMMMortg Interest to Schedualed Total Cash balancePaymentInvestorPrincipalPrincipalflow
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