The green bank originates a pool of containing 100 30-year fixed -rate mortgages with loan amount of $250,000 each. All mortgages in the pool carry a rate of 6.5% with monthly payments. The servicing fee is 0.05% each month. The green bank would like to sell the pool to investors via io/pop strips. Suppose that they issue 150,000 shares of io/POV strips and the market interest rate is 6%.

1. assume that there are no prepayment and no default, how much an investor would like to pay for each share of the io/POV strips?
2. What is is the price of each share of the io/POV strips if there are a constant prepayment rate of 1.5% every month and no default?
3. What is the price of each share of the io/POV strips if there are constant default rate of 1.5% every month (assuming the recovering rate is 50%) and no repayment?
4. Discuss finding.