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.