REE 5205 Final Exam with Complete Solutions
On a simple MPT how is a coupon calculated Answer-lowest note rate in pool minus
service and guarantee fee
Reasons for trade outside of TBA market Answer-1. Pools with favorable attributes
2. Non-deliverable pools
What is the purpose of a Z tranche...
On a simple MPT how is a coupon calculated Answer-lowest note rate in pool minus
service and guarantee fee
Reasons for trade outside of TBA market Answer-1. Pools with favorable attributes
2. Non-deliverable pools
What is the purpose of a Z tranche Answer-real CFs go to priority classes. It works as a
neg am. A Z tranche helps to shorten the average life and the life variability in the pool to
reduce extension risk
What purpose does a scalar service in floater/inverse floater Answer-used by lenders to
hedge portfolios. Purchase a floater if you expect rates to rise. Purchase an inverse floater if you
expect rates to fall.
What are 2 types of loan delivery Answer-1. whole loan conduit
2. lender swap
What are two types of whole loan execution Answer-1. mandatory commit
2. best effort commit
, REE 5205 Final Exam with Complete Solutions
Two types of MPT trades Answer-1. TBA
2. Specified Pool
3 types of loan servicers Answer-1. Primary
2. Master
3. Special
3 types of private label CMBS deals Answer-1. Conduit
2. large loan
3. SASB
Compare guarantee fees of GNMA vs. GSE Answer-6 BPS for GNMA; varies for GSEs
Contraction Answer-Contraction is when the life of a security is shorter than expected
because falling rates increase prepayment speed
Extension Answer-extension risk is when the life of a security is longer than expected du
to higher rates. Prepayment decreases.
How does default affect discount bonds Answer-yield increases if pool pays down faster
prepayment has a positive effect
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller GOLDTUTORS. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.