Pricing And Valuation Analysis Of Fixed Rate Mortgages

Essay specific features

 

Issue:

Business

 

Written by:

Jennie S

 

Date added:

June 28, 2015

 

Level:

University

 

Grade:

A

 

No of pages / words:

10 / 2702

 

Was viewed:

551 times

 

Rating of current essay:

 
Essay content:

The analysis included appropriate pricing of the mortgages, structure of the mortgage offerings in relation to handling of discount points, potential liquidation of the mortgages and hedging opportunities. Key findings that contributed to our recommendations include: • PFMC could hedge against rising interest rate risk and have the potential to realize gains if interest rates decrease...
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Purpose of Analysis Purpose: The critical questions that need to be addressed in the PMFC portfolio include, but are not limited to: • Were the mortgages properly priced a year ago? • Since PMFC is in need of cash, should the mortgages be liquidated? • If the mortgages should be liquidated, what is the maximum liquidation value or price of the mortgages? • What is the appropriate mechanism to use to hedge interest rate risk associated with the mortgage investment if they are to be kept in PMFC's portfolio? To address these issues, several scenarios have been prepared and the relevant information, such as annual percentage rate, effective yield amongst others, was calculated...
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