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Lag response of prepayments |
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Definition of Lag response of prepaymentsLag response of prepaymentsThere is typically a lag of about three months between the time the weighted
Related Terms:LagPayment of a financial obligation later than is expected or required, as in lead and lag. Also, the number PrepaymentsPayments made in excess of scheduled mortgage principal repayments. net cost of normal spoilagethe cost of spoiled work less the estimated disposal value of that work normal spoilagespoilage that has been planned or foreseen; is a product cost Spoilage, abnormalSpoilage arising from the production process that exceeds the normal Spoilage, normalThe amount of spoilage that naturally arises as part of a production Direct-Response AdvertisingAdvertising designed to elicit sales to customers who can be economic components modelAbramsâ€™ model for calculating DLOM based on the interaction of discounts from four economic components. Gordon modelpresent value of a perpetuity with growth. log size modelAbramsâ€™ model to calculate discount rates as a function of the logarithm of the value of the firm. QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate Accumulated Benefit Obligation (ABO)An approximate measure of the liability of a plan in the event of a Alternative mortgage instrumentsVariations of mortgage instruments such as adjustable-rate and variablerate Arbitrage-free option-pricing modelsYield curve option-pricing models. Arithmetic average (mean) rate of returnArithmetic mean return. Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital Asset Pricing model (CAPM), that determines the required AverageAn arithmetic mean of selected stocks intended to represent the behavior of the market or some Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average age of accounts receivableThe weighted-average age of all of the firm's outstanding invoices. Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Average (across-day) measuresAn estimation of price that uses the average or representative price of a Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Average tax rateTaxes as a fraction of income; total taxes divided by total taxable income. Back feeThe fee paid on the extension date if the buyer wishes to continue the option. Back officeBrokerage house clerical operations that support, but do not include, the trading of stocks and Back-to-back financingAn intercompany loan channeled through a bank. Back-to-back loanA loan in which two companies in separate countries borrow each other's currency for a Back-up1) When bond yields and prices fall, the market is said to back-up. BackwardationA market condition in which futures prices are lower in the distant delivery months than in Balance of paymentsA statistical compilation formulated by a sovereign nation of all economic transactions Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Break-even lease paymentThe lease Payment at which a party to a prospective lease is indifferent between Break-even payment rateThe prePayment rate of a MBS coupon that will produce the same CFY as that of Break-even timeRelated: Premium payback period. Buy limit orderA conditional trading order that indicates a security may be purchased only at the designated Buy-backAnother term for a repo. Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Cash flow time-lineLine depicting the operating activities and cash flows for a firm over a particular period. Changes in Financial PositionSources of funds internally provided from operations that alter a company's Clearing House Automated Payments System (CHAPS)A computerized clearing system for sterling funds Clearing House Interbank Payments System (CHIPS)An international wire transfer system for high-value Closed-end mortgagemortgage against which no additional debt may be issued. Closing purchaseA transaction in which the purchaser's intention is to reduce or eliminate a short position in CollateralAssets than can be repossessed if a borrower defaults. Collateral trust bondsA bond in which the issuer (often a holding company) grants investors a lien on Collateralized mortgage obligation (CMO)A security backed by a pool of pass-throughs , structured so that Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Constant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount Continuous random variableA random value that can take any fractional value within specified ranges, as Conventional mortgageA loan based on the credit of the borrower and on the collateral for the mortgage. Corporate financial managementThe application of financial principals within a corporation to create and Corporate financial planningfinancial planning conducted by a firm that encompasses preparation of both Country financial riskThe ability of the national economy to generate enough foreign exchange to meet CouponThe periodic interest Payment made to the bondholders during the life of the bond. Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Coupon paymentsA bond's interest Payments. Coupon rateIn bonds, notes or other fixed income securities, the stated percentage rate of interest, usually Cross-border riskRefers to the volatility of returns on international investments caused by events associated Current couponA bond selling at or close to par, that is, a bond with a coupon close to the yields currently Current-coupon issuesRelated: Benchmark issues Date of paymentDate dividend checks are mailed. Day orderAn order to buy or sell stock that automatically expires if it can't be executed on the day it is entered. Delivery versus paymentA transaction in which the buyer's Payment for securities is due at the time of DependentAcceptance of a capital budgeting project contingent on the acceptance of another project. Deterministic modelsLiability-matching models that assume that the liability Payments and the asset cash Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Discounted dividend model (DDM)A formula to estimate the intrinsic value of a firm by figuring the Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Discrete random variableA random variable that can take only a certain specified set of discrete possible Dividend clawbackWith respect to a project financing, an arrangement under which the sponsors of a project Dividend discount model (DDM)A model for valuing the common stock of a company, based on the Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Dollar-weighted rate of returnAlso called the internal rate of return, the interest rate that will make the Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms Economic order quantity (EOQ)The order quantity that minimizes total inventory costs. Endogenous variableA value determined within the context of a model. Excess reservesAny excess of actual reserves above required reserves. Excess return on the market portfolioThe difference between the return on the market portfolio and the Excess returnsAlso called abnormal returns, returns in excess of those required by some asset pricing model. Exogenous variableA variable whose value is determined outside the model in which it is used. Also called Expected future cash flowsProjected future cash flows associated with an asset of decision. Expected future returnThe return that is expected to be earned on an asset in the future. Also called the Expected returnThe return expected on a risky asset based on a probability distribution for the possible rates Expected return on investmentThe return one can expect to earn on an investment. See: capital asset Expected return-beta relationshipImplication of the CAPM that security risk premiums will be Expected valueThe weighted average of a probability distribution. Expected value of perfect informationThe expected value if the future uncertain outcomes could be known Extrapolative statistical modelsmodels that apply a formula to historical data and project results for a Factor modelA way of decomposing the factors that influence a security's rate of return into common and FHA prepayment experienceThe percentage of loans in a pool of mortgages outstanding at the origination Fill or kill orderA trading order that is canceled unless executed within a designated time period. Financial analystsAlso called securities analysts and investment analysts, professionals who analyze Financial assetsClaims on real assets. Financial controlThe management of a firm's costs and expenses in order to control them in relation to Financial distressEvents preceding and including bankruptcy, such as violation of loan contracts. Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes Financial engineeringCombining or dividing existing instruments to create new financial products. Financial futureA contract entered into now that provides for the delivery of a specified asset in exchange Financial intermediariesInstitutions that provide the market function of matching borrowers and lenders or
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