Скачать или смотреть What Is The Prepayment Risk? - AssetsandOpportunity.org

What Is The Prepayment Risk? In this informative video, we will discuss the concept of prepayment risk and its importance for lenders and investors. Prepayment risk arises when borrowers pay off loans earlier than anticipated, impacting the cash flows that lenders expect from interest payments. We will explain how this risk is especially relevant in fixed-income investments such as mortgage loans, mortgage-backed securities, and callable bonds.

You will learn how fluctuations in interest rates affect prepayment behavior, with borrowers often refinancing when rates decrease, leading to early loan repayment. This can result in investors receiving their principal back sooner but missing out on the anticipated interest income. Conversely, when interest rates rise, the likelihood of early repayment diminishes, but it may increase the risk of defaults as borrowers face higher payment obligations.

Understanding prepayment risk is essential for anyone involved in fixed-income securities, as it influences income predictability and overall returns. We will share strategies for managing this risk, including diversification and selecting securities that exhibit lower sensitivity to prepayment. Join us for this detailed discussion and subscribe to our channel for more informative content on wealth-building strategies.

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