What is the total amount of the prepayments

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Consider a $400 million pass-through MBS that has just been created (so the 'seasoning' of the pass-through is equal to 0). The underlying pool of mortgages each has a maturity of 20 years and an annual mortgage coupon rate of 6%. The pass-through rate of the mortgage pool is 5%.

Problem 1: What is the total amount of the prepayments if the rate of prepayments increases to 200 PSA?

Reference no: EM132945107

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