Which tranche is clearly too rich?
What will be an ideal response?
The support tranche is rich relative to Treasuries. We might add that a typical OAS run will be done for 512 to 1,024 interest-rate scenario paths to value a RMBS. The scenarios generated using the simulation method look very realistic and, furthermore, reproduce today's Treasury curve. By employing this technique, the money manager is effectively saying that Treasuries are fairly priced today and that the objective is to determine whether a specific RMBS is rich or cheap relative to Treasuries. The number of interest-rate paths determines how "good" the estimate is, not relative to the truth but relative to the model. The more paths, the more average spread tends to settle down.
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A(n) ________ is the vehicle used to pose questions that the researcher wants respondents to answer
A) interview process B) data collection C) telephone D) questionnaire E) statistical package
The property and liability insurance industry is characterized by a repetitive pattern of loose underwriting standards with low premiums followed by tight underwriting standards with high premiums. This repetitive pattern is called the
A) underwriting by exception method. B) business cycle. C) underwriting cycle. D) account underwriting method.