Explain why you agree or disagree with the following statement: "When the Monte Carlo simulation methodology is used to value a RMBS, a PSA assumption is employed for all interest-rate paths."
What will be an ideal response?
As seen in the illustration and Exhibit 19-9, the collateral value of a CMO is not always influenced by the PSA assumption when using the Monte Carlos simulation methodology. However, the value of the tranches is influenced so that there is a need to employ an accurate PSA assumption to gage how the price will change when prepayment assumptions change.
You might also like to view...
________ describes the company's optimization of the value of its customer base
A) Customer relationship management B) Behavioral targeting C) Customer value management D) Terminal marketing E) Personalized marketing
A person who leases a single-family dwelling and does not own more than three single-family dwellings does not come under the purview of the Fair Housing Act of 1968
Indicate whether the statement is true or false
The ________ of the U.S. Constitution set(s) forth the basic structure of our government and the respective roles of the state and federal governments
A) Bill of Rights B) Articles C) Codes D) Due Process Clause
Although the internet has changed many aspects of our lives, it hasn't proven very useful for collecting and/or analyzing financial and economic data
Indicate whether the statement is true or false