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What is the smm for the month 42

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Reference no: EM133062784

Problem: Mr. Richard is looking at the historical prepayment for a pass-through security. He finds the following:

  • Mortgage balance in month 42 = US$ 260,000,000
  • Scheduled principal payment in month 42 = US$ 1,000,000
  • Prepayment in month 42 = US$ 2,450,000

Required:

Question 1: What is the SMM for the month 42?

Question 2: How should Mr. Richard interpret the SMM computed?

Question 3: What is the CPR for month 42?

Question 4: How should Mr. Richard interpret the CPR computed?

Reference no: EM133062784

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