After 30 months,what is the 100 PSA benchmark conditional prepayment rate per year?

Question

Quizplus · Accepted Answer

The 100 PSA benchmark assumes a prepayment rate of 1 percent per month, or 12 percent per year. After 30 months, the cumulative PSA speed is 30 x 1 = 30. Therefore, the conditional prepayment rate per year is 100 + (30 x 0.2) = 106 percent, or 6 percent higher than the assumed 100 PSA benchmark. Therefore, the answer is C) 6 percent.

After 30 Months,what Is the 100 PSA Benchmark Conditional Prepayment