I think the above question from the CFAI Eoc is too long.We have to create a prepayment schedule and allocate cash flows,interest,principals to various tranches at different maturities…
Although the problem deals with simple calculations but it is way too long where you have to find the cashflows etc for 48 months.
I donot think such a long question can be asked in the exam.However this is L2 and anything is possible.
I haven’t done this section yet, but felt the calculations were similarly intensive in Reading 36 (FCF Valuation). I just used an excel s/s to speed it up. The relevant takeaway is to understand the concepts and implementation (as opposed to using pencils and papers and calculators). Need to spend time very efficiently at this stage…