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Only 4 please Wer cannot be determined with the given information Prepayment Risk and Default Risk BOA originates 100 Fully Amortizing Fixed Rate Mortgages, each

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Only 4 please

Wer cannot be determined with the given information Prepayment Risk and Default Risk BOA originates 100 Fully Amortizing Fixed Rate Mortgages, each has a $1,000 balance, 4% interest rate (no fees), 25-year term, and annual payments. BOA immediately issues 10 and PO strips backed by the pool of these mortgages and sells them to investors who discount payoffs at 3%. Hint: use the Prepay.xlsx file on Blackboard, especially the last year's HW7 example. 2. What is the value of this pool of mortgages, according to investors? I 3. What profits does BOA make immediately? (the answer will be a few thousand dollars) a 4. What would be the profits if the expected prepayment rate was 10% per year

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