5. Solve the following problems about mortgage-backed securities.

Suppose Federal National Mortgage Association sold the Mortgage-Backed Securities (MBS) backed by fixed-rate mortgages with the MBS having the following features:

• Original mortgage balance = $200,000,000
• Weighted average coupon rate (WAC) = 8%
• Weighted average maturity (WAM) = 150 months
• Current prepayment speed = 150 PSA
• Pass-through rate = PT Rate = 7%

(1) What is the prepayment and amount of total cash flows to the investors of the MBS for month 2? (5 points) (I will NOT grade a separate Excel file, please copy and paste your Excel sheet or write down your answers here)

(2) What is the total amount of the compensation to the issuer of the MBS for month 2 (use the spread between WAC and PT rate)?