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Principal repayment before the scheduled date is called a prepayment. Every individual borrower normally has the option to pay off all or part of their loan before the scheduled date. It is also known as a prepayment option. Prepayment option is similar to call option. When an issuer exercises call option, he retires the bond at the call price which is usually greater then the par value. But prepayments are made at the par value of the bond.
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Consider a currency swap in which the domestic party pays a fixed rate in foreign currency, the UK pounds sterling, and the counterparty pays a fixed rate in US Dollars. The not
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what are the characteristics of relative cost
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