Check all that is true about the SDA default model: If you know the beginning pool...

Check all that is true about the SDA default model:

		If you know the beginning pool balance and assume a 200% SDA, you can calculate what the CDR is for each month
		SDA stands for standard default assumption
		If you know the beginning pool balance and assume a 200% SDA, you can calculate what the CDX is for each month
		Under the 100% SDA assumption no one defaults when their mortgage is a few months away from being paid out
		SDA function for defaults takes the same shape as a PSA function for prepayments
		The SDA takes into account maturity of the mortgage

Expert Solution

I have answered the question below

Please up vote for the same and thanks!!!

Do reach out in the comments for any queries

Answer:

The true statements are 1 and 2

The fourth statement is false since default rate after a month is 120 which is low (0.03%), but it is not zero (no one defaults). Statement 1 is true since the SDA formula offers a monthly default rate which may be converted into the CDR. Statement 5 is false because SDA assumes that the defaults in the end period of the loan are very low whereas PSA assumes pre-payments remain at six percent till the maturity. SDA actually stands for Standard Default Assumption. Statement 3 is false since the SDA offers only the conditional default rate but the outstanding balance of the pool is influenced by the pre-payment which is actually not provided. Also, statement 6 is false since SDA takes into consideration the month since its origination.

jeff jeffy answered 1 year ago

Which of the following statements about the FCF valuation model are true? Check all that apply....

Which of the following statements about the FCF valuation model are true? Check all that apply. A. The model has limited applicability because it fails to adjust for a firm's riskiness—particularly that created by managers' decisions to use debt in the firm's capital structure, or decisions regarding the payment of cash dividends. B. The model is useful because it examines the relationship between a company's risk, operating profitability, and value of the firm's operations. C. A company's FCFs are a...

Which of the following statements about the FCF valuation model are true? Check all that apply....

Which of the following statements about the FCF valuation model are true? Check all that apply. A. The FCF valuation model reflects the firm's riskiness—as it affects the company's intrinsic value—via the WACC variable. B. A company's FCFs are a function of how effectively managers control the firm's costs, manage its operating and nonoperating assets, and generate sales revenues. C. The model is useful because it demonstrates the relationship between quality of the decisions that managers make and the value...

Which of the following is true about a credit default swap? A. All three of these...

Which of the following is true about a credit default swap? A. All three of these potential answers here are true about a credit default swap. B. It is basically the same as a mortgage backed security C. It is insurance on an investment D. It helps to reduce the defualt rate on mortgages

Which of the following statements about a monopoly firm are true? (Check all that apply.) It...

Which of the following statements about a monopoly firm are true? (Check all that apply.) It faces a downward-sloping demand curve. Its long-run average total cost curve is always downward sloping. Its marginal revenue is always below the price. It is always profitable in the short run. It is the only seller of a good or service with no close substitutes available. It always experiences economies of scale.

The following is true about Alzheimer's Disease Check all that apply it is irreversible it accounts...

The following is true about Alzheimer's Disease Check all that apply it is irreversible it accounts for 2/3 of all dementia conditions it causes significant cognitive impairment it can be prevented Question 40 1 Point The Demographic Transition Theory attempts to explain the trends in population aging True False

Which of the following statements) about the history of transaction processing isare) true? (Check all that...

Which of the following statements) about the history of transaction processing isare) true? (Check all that apply. When computers were invented, we digitized journals and ledgers and created transaction files and master files that did the job of paper. based journals and ledgers. Originally, people kept track of transactions using a single-entry accounting system When the number of master files proliferated, we combined multiple files into databases, which have grown much smaller and simpler We used double bookkeeping systems with...

1. Which of the following statements are true about short selling? Check all that apply: The...

1. Which of the following statements are true about short selling? Check all that apply: The investor involved in short selling anticipates that the share price will fall. Short selling is the sale of a security that is not owned by the seller. The investor involved in short selling anticipates that the share price will increase. Short selling means that an investor purchases securities using funds borrowed from her broker. Short sellers borrow securities and sell them immediately. 2. The...

Which statements would also be true about the effects of fasciculin? Check all that apply. Group...

Which statements would also be true about the effects of fasciculin? Check all that apply. Group of answer choices It would cause more calcium to be released fron the sarcoplasmic reticulum It would increase the amount of ACh in the synapse It would decrease the amount of ACH in the synapse It would increase parasympathetic output It would increase sympathetic output It would decrease parasympathetic output It would decrease sympathetic output It would have influence on autonomic output

Which of the following is a true statement? (Check all that apply.)

Which of the following is a true statement? (Check all that apply.)A technological improvement isolated to one sector can indirectly result in more production in all other sectors.All points on the PPF are productively efficient.It is possible for a point to be allocatively efficient without being productively efficient.PPFs slope down for the same reason that the demand curve slopes down.

Part A Which of the following statements are true regarding transformers? Check all that apply. Check...

Part A Which of the following statements are true regarding transformers? Check all that apply. Check all that apply. In a transformer, if the primary coil contains more loops than the secondary coil, then it is a step-up transformer. A transformer converts mechanical energy into electrical energy. A transformer is used to increase or decrease a direct current voltage. A transformer is used to increase or decrease an alternating current voltage. In a transformer, if the secondary coil contains more...

Question

Check all that is true about the SDA default model: If you know the beginning pool...

Solutions

Expert Solution

Related Solutions

Which of the following statements about the FCF valuation model are true? Check all that apply....

Which of the following statements about the FCF valuation model are true? Check all that apply....

Which of the following is true about a credit default swap? A. All three of these...

Which of the following statements about a monopoly firm are true? (Check all that apply.) It...

The following is true about Alzheimer's Disease Check all that apply it is irreversible it accounts...

Which of the following statements) about the history of transaction processing isare) true? (Check all that...

1. Which of the following statements are true about short selling? Check all that apply: The...

Which statements would also be true about the effects of fasciculin? Check all that apply. Group...

Which of the following is a true statement? (Check all that apply.)

Part A Which of the following statements are true regarding transformers? Check all that apply. Check...