Explain why a sticky cap is more expensive than a similar


1. Explain why a sticky cap is more expensive than a similar ratchet cap.

2. Explain why IOs and POs have opposite sensitivities to the rate of prepayments.

3. ''An option adjusted spread is analogous to the yield on a bond.'' Explain this statement.

4. Prove equation (31.15).

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Financial Econometrics: Explain why a sticky cap is more expensive than a similar
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