Prepayment speed in the bear stearns model

Assignment Help Financial Management
Reference no: EM132056380

1. The main reason that prepayment speed in the Bear Stearns model is faster than in the baseline 100 PSA model is because:

a. Alt-A borrowers typically prepay more quickly than prime borrowers.

b. Prepayments on newer mortgages increase faster in the Bear Stearns model.

c. House prices in the Bear Stearns model rise and fall unpredictably.

2. Explain the importance of "time value of money" Would you rather receive $100 today or $120 in two years? Assume a risk free available interest rate of 10% calculated annually. Show your work.

Reference no: EM132056380

Questions Cloud

What is the company debt–equity ratio : The company’s cost of equity is 14 percent, and its cost of debt is 8.2 percent. The tax rate is 35 percent. What is the company’s debt–equity ratio?
Identify and evaluate external influences negatively : Identify and evaluate external influences that are positively and negatively affecting workforce needs in health care delivery.
Evaluate the level of system security : Evaluate the level of system security (i.e., high, medium, low) needed to ensure information integrity within automated business systems.
Describe how the transportation shipment patterns evolve : Describe how the transportation shipment patterns evolve as the minimum delivery to each warehouse changes.
Prepayment speed in the bear stearns model : The main reason that prepayment speed in the Bear Stearns model is faster than in the baseline 100 PSA model is because:
Evaluate the different types of budgets : Evaluate the different types of budgets and discuss how operating and financial budgets are prepared for a manufacturing company.
The best choice for builder in inflationary environment : Be able to explain how a “buy-down” works and why it might be the best choice for a builder in an inflationary environment.
Research the six key functions of a businesss operations : Research, identify, and discuss the six key functions of a business's operations.
What would you recommend to correct the variance : Read the following scenario and then thoughtfully discuss the questions. Pick an organization within the airline industry that you are familiar.

Reviews

Write a Review

Financial Management Questions & Answers

  Difference between a correspondent and bankers bank

What is the difference between a correspondent, respondent, and banker's bank?

  How many euros would a dollar buy tomorrow

"Suppose that 1 Euro could be purchased in the foreign exchange market today for $0.25. If the Euro appreciated 10 percent tomorrow against the dollar, how many Euros would a dollar buy tomorrow?"

  What is the equivalent annual cost of the washer

Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $6,900 and sell its old washer for $2,900. The new washer will last for 6 years and save $1,650 a year in expenses.

  Considering changes in its working capital policies

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler’s sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the..

  What would total recruiting cost be for chester next year

The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Chester next year?

  Would improve the total return for the sale

Should da Guv make a counteroffer that would improve the total return for the sale?

  Required rate of return-what is beta coefficient

If a company's required rate of return is 22%, its average market return is 18%, and the interest yield on 10-year US Treasury Bonds is 4%, what is the company’s Beta coefficient?

  Was it a good decision to increase advertising expenses

Was it a good decision to increase advertising expenses? Suppose that the contribution margin ratio is now 0.4. Would it be a good decision to increase advertising expenses?

  Currencies-us dollar foreign-exchange rates

Currencies - U.S. dollar foreign-exchange rates. December 18. 2009.

  What is the npv of savings from outsourcing

Assume a discount rate of 9 percent. Spot EURINR equals 65. What is the NPV of savings from outsourcing?

  Constant growth valuation

Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $18 a share. The stock just paid a dividend of $3.25 a share (i.e., D0 = $3.25), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock pric..

  Project has the cash flows-What is the IRR

A project has the following cash flows: Year Cash Flow 0 $ 40,500 1 – 19,500 2 – 30,500 What is the IRR for this project? (Round your answer to 2 decimal places. (e.g., 32.16)) IRR % What is the NPV of this project, if the required return is 10 perce..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd