What is vector analysis?
What will be an ideal response?
One practice that market participants use to overcome the drawback of the PSA benchmark is to assume that the PSA speed can change over time. This technique to deal with this drawback is referred to as vector analysis. A vector is simply a set of numbers. In the case of prepayments, it is a vector of prepayment speeds. Vector analysis is particularly useful for CMO tranches that are dramatically affected by the initial slowing down of prepayments, and then speeding up of prepayments, or vice versa.
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An exploration of the effect of changing multiple project parameters on net present value (NPV) is called ________
A) scenario analysis B) internal rate of return (IRR) analysis C) accounting break-even analysis D) sensitivity analysis
Narrative 11-2 Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest
hundredth of a percent) Refer to Narrative 11-2. Eduardo wants to have $17,500 in 9 years. Calculate how much he should invest now at 8% interest, compounded quarterly in order to reach his goal.