- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 19. Mortgage-Backed Security (MBS) Instrument and Market Features
- Subject 3. Residential Mortgage-Backed Securities
CFA Practice Question
Calculate the total expected cash flow from principal payment for the next month on a mortgage pool with $100,000 principal, scheduled monthly principal payments of $200, CPR of 6% and an age of 40 months.
Correct Answer: 713
Prepayment = 0.5143% x ($100k - $200) = $513
Total principal payments: 513 + 200 = 713
SMM = 1 - (1 - 0.06)1/12 = 0.5143%
Prepayment = 0.5143% x ($100k - $200) = $513
Total principal payments: 513 + 200 = 713
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan2 | Total=schduled+prepayment |
| vi2009 | it is total cash flow .. |
| NIKKIZ | Total cash flow should include interest... |
| joywind | The question is asking total cash flow from principal payment, no interest should be included~ |