Callable Mortgage Bonds

<p class="xparagraph" style="margin: 0cm; margin-bottom: .0001pt;"><span class="xnormaltextrun"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">Callable mortgage bonds are utilized by individuals and companies to finance the purchase of real estate, and this asset class therefore plays a crucial role in modern society. Callable mortgage bonds constitute an enormous asset class and often offer long-term stable investments that are very attractive for pension funds.</span></span><span class="xeop">&nbsp;</span></p> <p class="xparagraph" style="margin: 0cm; margin-bottom: .0001pt;">&nbsp;</p> <p class="xparagraph" style="margin: 0cm; margin-bottom: .0001pt; white-space: pre-wrap;"><span style="font-variant-ligatures: none!important;"><span class="xnormaltextrun"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">This book focuses on the pricing and calculation of risk numbers of callable fixed-rate mortgage bonds. Owing to the, from a financial perspective, irrational behaviour of borrowers, the pricing of these instruments usually requires the use of numerical solutions. Traditionally, it has been either a Monte Carlo simulation or a Finite Difference method. This book covers both methods and, in addition, the relatively new Fourier technique. This latter technique also creates a link between the interest rate derivatives market and the market for callable mortgage bonds. Finally, a chapter presenting a model for the valuation of a mortgage credit institute&rsquo;s loan book is included.</span></span></span><span class="xeop">&nbsp;</span></p>