At 100% PSA, the single monthly mortality rate corresponding to a constant prepayment rate of 7% is

Name: At 100% PSA, the single monthly mortality rate corresponding to a constant prepayment rate of 7% is
Brand: Quizplus
Rating: 4.9 (60 reviews)

Question

Quizplus · Accepted Answer

The correct answer is found by converting the annual constant prepayment rate (CPR) of 7% to a monthly rate using the single monthly mortality (SMM) formula: SMM = 1 - (1 - CPR)^(1/12). Plugging in 7% for CPR gives SMM = 1 - (1 - 0.07)^(1/12) = 0.006029.

At 100% PSA, the Single Monthly Mortality Rate Corresponding to a Constant