PREPAYMENT RISK Definition

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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.

Learn new Accounting Terms

ORDER INTAKE is all orders which were legally concluded during the respective accounting period under review and have also come into effect.

DISOUNT FOR LACK OF MARKETABILITY is an amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability.

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