What would happen to the static spread for each tranche if a 15% volatility is assumed?
What will be an ideal response?
At the higher level of assumed interest-rate volatility of 15%, the static spread would fall because of the homeowner's option to prepay. This would negatively affect the collateral with its loss distributed among the tranches with tranches with longer duration experiencing greater losses. Tranche Z and any residual tranche would be least affected.
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Market skimming pricing makes sense under all the following conditions, EXCEPT if ________
A) a sufficient number of buyers have a high current demand B) the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear C) the high initial price does not attract more competitors to the market D) consumers are likely to delay buying the product until its price drops E) the high price communicates the image of a superior product
Which of the following would be an appropriate alternative hypothesis?
A. The proportion of a population is equal to 70. B. The proportion of a sample is equal to 70. C. The proportion of a population is greater than 70. D. The proportion of a sample is greater than 70.
Relational databases establish the relationships between entities by means of common fields included in a file called a(n):
A) entity. B) relationship. C) relation. D) association.
________ is the division of an insurance policy among many different insurance companies.
A. Reinsurance B. Multi-insurance C. Coinsurance D. Insurance partnership E. Insurance collaboration