Data Input Box: Number of mortgages in initial pool 500 Average mortgage balance $300,000 Initial mortgage pool balance $150,000,000 Prepayment rate 7.50% Mortgage rate 4.50% Servicing and Guarantee Fee 0.3% Coupon rate 4.20% Given the above characteristics of a MPT security, using the Excel file demonstrated in class answer the following questions: 1) If market rates are currently 4.65%, how much will an investor be willing to pay for a 20% share of this pool? Round to the nearest cent. 2) In the table provided, the servicing fee is 0.3%; if instead the servicing fee was 0.5%, what would be the servicing fee in year 1? Round to the nearest cent. 3) If you hold all else equal, what will increasing the servicing fee do to the price investors are willing to pay for this security? (Increase price, decrease price, no effect on price) Why?