Book says that if there’s an extended period of prepayments below intial upper collar, there will be an increase in the upper range of the effective collar. And if extended period of prepayments below lower range of initial collar, the lower range of the effective collar witll increase.
Having a hard time wrapping my head around this. I thought we wanted a narrow window? So when prepayments fall in our initial range (b/t the two bounds), the upper bound shifts UP, widening the window?