Prepayment


Prepayment
1. The payment of a debt obligation prior to its due date.

2. The excess payment over a scheduled debt repayment amount.

1. Examples include deferred expenses such as rent and early loan repayments.

2. Mortgage pass-through securities are prone to prepayment risk during a period of falling interest rates, as mortgage payments tend to accelerate.


Investment dictionary. . 2012.


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