Discuss the impact of each of the following on prepayment risk for a mortgage backed pass through
Question:
a. High coupon interest MBS versus low coupon interest MBS
b. MBS issued six years prior versus MBS issued this year
c. Demographic trends in different areas of the country Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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Prepayment Risk a When mortgage rates fall prepayments on highcoupon MBSs will increase relative to ...View the full answer
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