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6 Cards in this Set
- Front
- Back
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ARM - Adjustable Rate Mortgage |
An adjustable rate mortgage is one in which the interest rate adjusts and can be constant for a specified period. 5/1 ARM has constant int. for 5 years and then adjusts yearly. |
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Capitalisation Rate |
= Net operating income ÷ MV of Property Showing the required return on property investments |
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Loan-to-Value Ratio |
=Bal. Of loan ÷ MV of Property |
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Load Factor |
=rentable area÷usable area Shows the load factor of common areas a tenant may be charged for in a rental. |
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Prepayment Risk |
Risk of interest rates declining and rising prepayment on a mortgage causing a refinancing to occur. |
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Pricing a CDS |
1 - Find the price of the bond or rf 2 - Use PVD and PVND to determine risk neutral probability of default. 3 - Model by event 4 - w (1/(1+rf)) payment 5 - w((1-R)/(1-rf)) payoff |
