Actex Study Guide, Exam Three, Mortgage Prepayment models

[Michael]

Perhaps an obvious question, but.......The Actex Life Con study guide talks about two models of mortgage prepayment in the annuities unit -- the Constant Prepayment Rate and the Public Securities Association models. These aren't really on the syllabus, are they? I couldn't find them anywhere....Thanks

[retaker]

What? I've never heard of them.

[FIOB]

Those are on the course 6 syllabus. What the hell do they have to do with life contingencies? Forget about them (for now).

[Michael]

I suppose they relate to life contingencies in that mortgages are uncertain streams of payments -- uncertain in that prepayment is possible. Thus, you can weave a survival model into the valuation....Anyhow, I was pretty sure the models weren't important, was just checking......