Calculate the duration for this mbs pool

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Question - Suppose we have a new type of MBS to accommodate the short-term investor. This new MBS security instrument contains only 3-year mortgages (in reality are rare if non-existent). ACME, a private secondary mortgage market, has pooled together ten $100,000 3-year mortgage loans. Note: To save space in writing out your work, you can scale the ten $100,000 to $100. Calculate the duration for this MBS pool assuming annual compounding for three years at 10 percent interest which

a. is a "zero coupon". 

b. is an interest-only MBS

c. is fully amortizable over the three years.

Reference no: EM132960958

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