- A decrease in the assets of a mortgage-backed securities portfolio due to the prepayment of the securities held in that portfolio. It is risk these portfolios face, which can lead to pre-payment risk and that usually forces the fund to reinvest the proceeds at lower yields than where the original securities were purchased.
Most mortgage-backed securities have an embedded call option held by the borrowers of the underlying mortgages backing those securities. When interest rates fall or home values rise, an incentive is created for homeowners to refinance their mortgage, which leads to portfolio runoff for the investors in those mortgages.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… … Universalium
Fairfax Financial — Infobox Company company name = Fairfax Financial Holdings Limited company company type = Public: (TSX|FFH, NYSE|FFH) industry = insurance foundation = 1985 location = Toronto, Ontario, Canada key people = Prem Watsa, chairman and chief executive… … Wikipedia
Ukraine — /yooh krayn , kruyn , yooh krayn/, n. a republic in SE Europe: rich agricultural and industrial region. 50,684,635; 223,090 sq. mi. (603,700 sq. km). Cap.: Kiev. Russian, Ukraina. Formerly, Ukrainian Soviet Socialist Republic. * * * Ukraine… … Universalium
Peru — Peruvian /peuh rooh vee euhn/, adj., n. /peuh rooh /, n. 1. Spanish, Perú /pe rddooh /. a republic in W South America. 24,949,512; 496,222 sq. mi. (1,285,215 sq. km). Cap.: Lima. 2. a city in N central Indiana. 13,764. 3. a city in N Illinois. 10 … Universalium
brazil — /breuh zil /, n. brazilwood. [1350 1400; ME brasile < ML < It < Sp brasil, deriv. of brasa live coal (the wood being red in color) < Gmc; see BRAISE] * * * Brazil Introduction Brazil Background: Following three centuries under the rule of… … Universalium
Brazil — Brazilian /breuh zil yeuhn/, adj., n. /breuh zil /, n. a republic in South America. 164,511,366; 3,286,170 sq. mi. (8,511,180 sq. km). Cap.: Brasília. Portuguese and Spanish, Brasil. Official name, Federative Republic of Brazil. * * * Brazil… … Universalium
global warming — an increase in the earth s average atmospheric temperature that causes corresponding changes in climate and that may result from the greenhouse effect. [1975 80] * * * Potential increase in global average surface temperatures resulting from… … Universalium
Ami Ayalon — MKs Date of birth = Birth date and age|1945|6|27|df=y Year of Aliyah = Date of death = Knesset(s) = 17th (current) Party = Labor Former parties = Gov t roles = Minister without Portfolio Amihai Ami Ayalon ( he. עמיחי איילון; born 27 June 1945) is … Wikipedia
Renewable energy in the United States — Brazos Wind Ranch in Texas. Presiden … Wikipedia
Italy — /it l ee/, n. a republic in S Europe, comprising a peninsula S of the Alps, and Sicily, Sardinia, Elba, and other smaller islands: a kingdom 1870 1946. 57,534,088; 116,294 sq. mi. (301,200 sq. km). Cap.: Rome. Italian, Italia. * * * Italy… … Universalium