Prutko - CFA MOCK 2014 PM

CFA Level II Fixed Income
#1

can anyone explain to me why isnt the answer 18.6?

How I derived that the answer -> 0.2% x 356 months (however maximum is 30 months thus the prepayment rate is at 6%)

6 X PSA of 3.1 = 18.6

Where have I gone wrong?

The answer multiplies is by 0.1333 - where does this come from?

Many thanks!

#2

thats qns 1 btw.

#3

356 months have not passed, only 4 months have passed (out of 360 months).

Therefore: (4/30)*0.06 = 0.1333*0.06 = 0.008

#4

Thank you for the explaination

Am I right then to do it in this way

0.2% x 4 months x 3.1?