true rate of interest
21Constant Default Rate - CDR — An annualized rate of default on a group of mortgages, typically within a collateralized product such as a mortgage backed security (MBS). The constant default rate represents the percentage of outstanding principal balances in the pool that are… …
22Security interest — A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt.[1] It gives the beneficiary of the security interest certain… …
23Fixed rate mortgage — A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or float. Other forms of mortgage loan include interest only… …
24Risk-free interest rate — The risk free interest rate is the interest rate that it is assumed can be obtained by investing in financial instruments with no default risk. However, the financial instrument can carry other types of risk, e.g. market risk (the risk of changes …
255-6 Hybrid Adjustable-Rate Mortgage - 5-6 Hybrid ARM — An adjustable rate mortgage with an initial five year fixed interest rate after which the interest rate begins to adjust every six months according to an index plus a margin (or, the fully indexed interest rate). The index is variable while the… …
26Indexed Rate — An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin. The indexed rate is used to calculate the interest rate on an adjustable rate mortgage (ARM). The… …
27Effective Interest Method — The practice of accounting for the discount at which a bond is sold as an interest expense to be amortized over the life of the bond. Using this method, additional interest expense is calculated using the prevailing market interest rate at the… …
28Floating exchange rate — Floating rate may also refer to a floating interest rate applied to a loan or other lending product. A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currency s value is allowed to fluctuate… …
29Internal rate of return — The internal rate of return (IRR) is a capital budgeting metric used by firms to decide whether they should make investments. It is an indicator of the efficiency or quality of an investment, as opposed to net present value (NPV), which indicates …
30Vested interest — is a communication theory that seeks to explain how influences impact behaviors. Coined by William Crano, vested interest refers to the amount that an attitude object is deemed ally relevant by the attitude holder (Crano, 1995). Not to be… …
