A graph of the PSA model for the prepayment rate on a pool of mortgages will produce a spike in the _________ year of cash flows:

Name: A graph of the PSA model for the prepayment rate on a pool of mortgages will produce a spike in the _________ year of cash flows:
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Question

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The PSA model typically shows a spike in prepayment rates in the third year as homeowners are more likely to refinance or move, leading to an increase in prepayments.

A Graph of the PSA Model for the Prepayment Rate