Prepayments 51
FIGURE 3.4 Notice the count function and the
WA SMM Curve.
The SUMPRODUCT is taking two rows of data: the monthly SMMs (row 8
of the Prepay Analysis sheet) and the beginning of period balances for each
vintage (row 7 of the Raw Data sheet). Instead of taking the entire row of data
though, the SUMPRODUCT reference uses an OFFSET function to instruct
the SUMPRODUCT to only take a certain amount of cells. This OFFSET
uses the count system of relevant data created in column AC. This way the
SUMPRODUCT only references the relevant data. Similarly, the SUM of the
balances that is used as the divisor only takes in the relevant balances. If this
OFFSET didn’t exist the SUM would be much higher than necessary. Copy and
paste the formula into cells AD8:AD31.
- Create an additional sheet and name itSummary. This is where the curves that
will be used for the projected modeling will be stored. Copy cells A7:B31 from
the Prepay Analysis sheet and paste them in A7 of the Summary sheet. On the
Summary sheet, label D5WA SMM Curve. In D8 through D31, reference the
