Explain why you agree or disagree with the following statement: "When the Monte Carlo simulation methodology is used to value a RMBS, a PSA assumption is employed for all interest-rate paths."
What will be an ideal response?
As seen in the illustration and Exhibit 19-9, the collateral value of a CMO is not always influenced by the PSA assumption when using the Monte Carlos simulation methodology. However, the value of the tranches is influenced so that there is a need to employ an accurate PSA assumption to gage how the price will change when prepayment assumptions change.
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Which of the following insurance policies will protect against defects that only an inspection would reveal, such as encroachments or adverse possession?
A. Hazard Insurance B. Lender's policy of title insurance C. Homeowner's coverage policy of title insurance D. Both B and C
Special consideration may have to be given office lighting if a number of terminal screens are used in a given area
Indicate whether the statement is true or false.