Mathematics Homework Help. Math MBS Security Instrument Questions
“Mathematics Homework Help”,
“text”: “Mathematics Homework Help. Math MBS Security Instrument Questions
Only bid if you can guarentee correct answers please. I need the work to be right. Thank you. Submission instructions: compute and handwrite solutions submit all work/setup which calculations 1a-c.Suppose we have a new type of MBS to accommodate the short-terminvestor. This new MBS security instrument contains only 5-yearmortgages (in reality are rare if non-existent). ACME, a privatesecondary mortgage market, has pooled together ten $100,000 5-yearmortgage loans. Note: To save space in writing out your work, you can scale the ten $100,000 to $100. Calculate the duration for this MBS pool assuming annual compounding for three years at 10 percent interest which a.is a ?zero coupon?b. is an interest-only MBS. c. is fully amortizable over the five years. Now assume that the interest-only MBS in problem 2b. is prepayable (butnot defaultable). Use the option-theoretic model to price this MBS. Interest rates have a 50% chance of going up 1% each year and a 50% chance of going down 1% each year. From your results, qualitatively compare the MBS value without prepayment to the MBS value with prepayment. Note: To save space in writing out your work, you can scale the ten $100,000 to $100. ? in your solution show the work/setup which includes the calculations for all steps in Slide 17?s Option Pricing Mathematics Homework Help”,
“url”: “/mathematics-homework-help-6855/”
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Only bid if you can guarentee correct answers please. I need the work to be right. Thank you.
Submission instructions: compute and handwrite solutions submit all work/setup which calculations
1a-c.
Suppose we have a new type of MBS to accommodate the short-term
investor. This new MBS security instrument contains only 5-year
mortgages (in reality are rare if non-existent). ACME, a private
secondary mortgage market, has pooled together ten $100,000 5-year
mortgage loans. Note: To save space in writing out your work, you can scale the ten $100,000 to $100.
Calculate the duration for this MBS pool assuming annual compounding for three years at 10 percent interest which
a.is a ?zero coupon?
b. is an interest-only MBS.
c. is fully amortizable over the five years.
Now assume that the interest-only MBS in problem 2b. is prepayable (butnot defaultable). Use the option-theoretic model to price this MBS.
Interest rates have a 50% chance of going up 1% each year and a 50%
chance of going down 1% each year. From your results, qualitatively
compare the MBS value without prepayment to the MBS value with
prepayment. Note: To save space in writing out your work, you can scale the ten $100,000 to $100. ? in your solution show the work/setup which includes the calculations for all steps in Slide 17?s Option Pricing
Mathematics Homework Help
