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Consider an MPT backed by 200 mortgages with average beginning balance of $50,000. The WAC = 4% and WAM =180 with monthly payments. Assume that

Consider an MPT backed by 200 mortgages with average beginning balance of $50,000. The WAC = 4% and WAM =180 with monthly payments. Assume that there is no prepayment and no servicing fee. Using the 200% SDA model, what is the dollar amount of defaults on month 5? [Hint: the formula for converting CDR into Monthly Default Rate (MDR) is: MDR = 1 (1 CDR)1/12. Remember that the MDR is applied to the pool balance after the scheduled principal has been paid.]

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