Why is the distinction between a voluntary and involuntary prepayment important in nonagency RMBS?
What will be an ideal response?
In nonagency RMBS, two prepayments rates are projected: voluntary prepayment rate and involuntary prepayment rate. The voluntary prepayment rate (VPR) is calculated similarly to a conditional prepayment rate (CPR). First a voluntary monthly mortgage rate, VMM, similar to the single monthly mortality rate (SMM) described in Chapter 11, is calculated. That monthly rate is then annualized to get the VPR. Involuntary prepayment rates are quoted like the conditional default rate (CDR), which is the annualized value of the unpaid principal balance of newly defaulted loans over the course of a month as a percentage of the unpaid balance of the pool (before scheduled principal payment) at the beginning of the month. The SMM for a month for a deal is the sum of the VMM and MDR for that month.
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Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012?
A) Sales commissions are charged to expense in 2012 on all sales revenue recognized in 2012 even though some of the commissions have not been paid. B) Insurance expense is recognized for the total cost of a 1-year policy purchased in May, 2012. C) Rent expenses are recognized as expenses in 2012 even though the last bill received in 2012 will not be paid until 2013. D) Sales commissions paid in 2012 for 2013 commissions are recorded as prepaid expenses for 2012.
The total time a product is in production, including process time, inspection time, wait time, and move time, is called:
A) efficiency time. B) manufacturing cycle time. C) customer response time. D) value-added time.
Larry wants to keep track of his vintage vinyl records, the value of each record, and who he lends the records to for parties. Larry should use a ________.
A. sticky note B. spreadsheet C. database D. table in Microsoft Word E. bulletin board
With reference to #49, the Rule Against Perpetuities does not apply to the son's interest
Indicate whether the statement is true or false