Cash flow yield, Financial Management

Assignment Help:

In structured products like mortgage-backed and assets-backed securities, the cash flows include both principal repayment and interest. The complication arises when individual borrowers repay their loans before the maturity date. To incorporate this prepayment factor into the expected cashflows from a security, a rate at which prepayments will occur is assumed. Once the cash flows are projected based on the assumed prepayment rate, cash flow yield is obtained. Cash flow yield may be defined as the interest rate that will make the present value of the projected cash flows which is based on assumed prepayments equal to the price plus the accrued interest.


Related Discussions:- Cash flow yield

What do you mean by average cost and marginal cost, Q. What do you mean by ...

Q. What do you mean by Average Cost and Marginal cost? Average Cost and Marginal cost: the average cost is the combined cost as explain above, but for the difference in the for

Explain difference among economic profit & producer surplus, What is the di...

What is the difference between economic profit and producer surplus? When economic profit is the difference among total revenue and total cost, producer surplus is the variatio

Derivatives, Derivatives - Financial instruments whose value varies with va...

Derivatives - Financial instruments whose value varies with value of an underlying asset (like a stock, BOND, commodity or currency) or index like interest rates. Financial instrum

Describe market value weights, Q. Describe Market Value Weights? Market...

Q. Describe Market Value Weights? Market Value Weights: - As per market worth scheme of weighting the weights to dissimilar sources of finance are assigned on the basis of thei

Current scenario of hedge fund industry, Global Scenario The Hedge Fund...

Global Scenario The Hedge Fund industry has captured over US $ 2 trillion in assets globally by the end of year 2006. According to an investor survey revealed for the Hedge Fun

Constructing the binomial interest rate tree, How to calculate the up anh d...

How to calculate the up anh down factor in the binomial interets rate tree

How do risk-averse investors compensate, How do risk-averse investors compe...

How do risk-averse investors compensate for risk when they take on investment projects? For the reason of risk aversion, people demand elevated rates of return for taking on hi

Optimal capital structure, (a) The calculation of the Weighted Average Cost...

(a) The calculation of the Weighted Average Cost of Capital (WACC) is theoretically easy but practically complex. Discuss. (b) Two-fifths of the total market value of Jefferson

How financial system works, Question: Part A  The financial syste...

Question: Part A  The financial system is complex in structure and function throughout the world. There are many different types of institutions: banks, insurance compani

Credit control - account receivable management, Q. Credit control - account...

Q. Credit control - account receivable management? Once credit has been established it is important to review outstanding accounts on a regular basis so overdue accounts can be

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd