COST AVOIDANCE Definition

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COST AVOIDANCE is an action taken in the present designed to decrease costs in the future.

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PREPAYMENT RISK, in the area of mortgage-backed securities, which are backed by loans on property, is the possibility that home owners will payoff their mortgages early, returning the investor's principal earlier than expected. This typically occurs during a declining inter­est rate environment, when home owners can refinance at lower rates, leaving investors vulnerable to the risk of reinvestment at lower rates.

EBIT is Earnings Before Interest and Tax. EBIT is an indicator of a companys financial performance calculated as revenue less expenses excluding tax and interest. It is sometimes referred to as operating earnings.

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