Hi,
I was wondering if someone could explain this to me from EOC question #6 of Reading 45.
How did CPR of month prior to 30 was derived?
Question:
Month PSA CPR SMM
5 100 .
15 80
Answer:
Month PSA CPR SMM
5 100 0.010 0.000837
15 80 0.024 0.002022
I understand how to derive CPR after 30 month yPSA = 6% x (y/100) = CPR
Then, 1-(1-CPR)^(1/12) to derive SMM.
But, how do we get CPR prior to 30 month?
Thanks in advance.
take the month (t) and divide by 30, then multiply this by 6%. Month 5 = (5/30) x .06 = .01
See page 403 in Book 5 for further explanation.
Great thanks!!!
PSA is just a yardstick (meterstick?) against which you compare CPR.
In month 10, for example, PSA is 2%. If CPR is 5%, then CPR is 5% ÷ 2% = 2.5 = 250% PSA.
In month 15, PSA is 3%, so if they tell you that CPR is 85% PSA, then CPR = 85% × 3% = 2.55%.
disregard comment.