Prepayment Speeds: CPR, SMM and Prepaid Principal
This lesson is part of the course
In this lesson
You convert yearly prepayment rates (CPR) into monthly rates (SMM) and back, compute the prepaid principal of a month, and see why the pool's level payment shrinks after prepayments.
Buy the course once for $9.99 to unlock every lesson and lab, the final exam and the certificate – lifetime access, no subscription.
Lessons in this course
- The Mortgage Pool: Level Payments, Interest and Scheduled Principal Locked
- Prepayment Speeds: CPR, SMM and Prepaid Principal Locked
- Seasoning Ramps and Speed Multiples: 50%, 100%, 200% Locked
- Pass-Through Cash Flows: Servicing and Guarantee Fees Locked
- Weighted Average Life at Different Speeds Locked
- Price and Yield: Discounting the Pool's Cash Flows Locked
- Sequential Tranches: Who Gets the Principal First Locked
- Scenario Dashboard: Rates, Speeds, WAL and Negative Convexity Locked