Use the following short rate tree. Short rate can increase or decrease in 6 months by equal probability. Use semi-annual compounding. Now, consider a 1 year mortgage (semi-annually paid) with a mortgage rate of 10% (so that a semi-annual mortgage rate is 5% ) and an initial principal balance of $20,000. The mortgage is divided into three sequential pay tranches. Tranche A receives the first $8,000 of the principal, tranche B receives the next $6,000 of the principal, and tranche C receives the remaining $6,000 of the principal. 5. Briefly explain the difference between value-minimizing prepayment policy and deterministic prepayment policy and how you would value the mortgage under value-minimizing prepayment policy