When pricing mortgage pass-through securities,issuers use each of the following methods to include prepayment assumptions EXCEPT:

Question

Quizplus · Accepted Answer

The pool factor technique is not a method used to include prepayment assumptions in the pricing of mortgage pass-through securities. Instead, it is a method used to calculate the remaining principal balance of mortgage-backed securities. Prepayment assumptions are typically included using methods such as FHA prepayment experience, the PSA prepayment model, and constant rates of prepayment.

When Pricing Mortgage Pass-Through Securities,issuers Use Each of the Following