hasis T Heading 1 T Heading 2 T Normal Strong Subtitle Title I No Spac... Subtle Em... Intense E... Quote Styles 4. Mortgage Pricing A 30Y fixed rate mortgage is issued at 6% coupon rate. The loan fully amortizes over 30 year period. Expected payoff time is 8 Years when initially issued. Assuming $1M in loan balance. a. Price the loan today at 5%, 6%, and 7% market yield, assuming loan termination term stays constant with interest rate (96 months at 5%; 96 months at 6%, and 96 months @ 7%) (4 points) b. calculate numerical duration and convexity at 6% market interest rate based on pricing from 4a (4 points) c. Price the loan today at 5%, 6%, and 7% yield, assuming loan termination term changes with interest rate (60 months at 5%; 120 months at 6%, and extends to 120 months @ 7%). (4points) b. calculate numerical duration and convexity at 6% market interest rate based on pricing from 4a (4 points)