Mortgage Securities: Cash Flows and Prepayment Risk

  • July 3, 1988
  • • Written by: James E. McNulty

Spring/Summer 1988, Vol 13, No 1

Abstract: The development of an organized secondary market for conventional mortgage loans raises many questions for mortgage investors. However, models for determining cash flows, methods of estimating the effect of prepayments and duration calculations that measure the price sensitivity of securities are helping to provide the answers.