Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Explain Coupon Rates, Interest Rates, and Number of Seasoned Mortgages in Pools?
Expert Solution
Step 1
Coupon rate:
The total yield annually from fixed-income security is called a coupon. And the rate at which the yield is received against initial investment is called the coupon rate.
Interest rate:
The total interest received annually from the borrower to use the capital at a certain time is called interest. The rate at which it is received against the initial investment by the lender it is called an interest rate.
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