A $25,000 face value GNMA pass-through quote sheet lists a spread to average life of 103,PSA of 220,and a price of 101-09. This means that
I. the pass-through yield is 103 basis points above the comparable maturity Treasury bond.
II. the pass-through is being prepaid more quickly than standard PSA.
III. the pass-through is priced at $25,272.50.

Question

Quizplus · Accepted Answer

The spread to average life of 103 indicates the yield is 103 basis points above the comparable Treasury bond, and a PSA of 220 means prepayments are faster than the standard PSA of 100. The price of 101-09 translates to $25,265.63, not $25,272.50.

A $25,000 Face Value GNMA Pass-Through Quote Sheet Lists a Spread