Prepayment risk: Difference between revisions
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imported>Doug Williamson (Create the page. Source: IASB discussion paper DP/2014/1 p28 Accounting for dynamic risk management.) |
imported>Doug Williamson (Add link.) |
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Revision as of 14:02, 13 August 2016
Prepayment risk is a form of interest rate risk for a financial institution.
It arises from the non-contractual early repayment by customers of, for example, fixed rate mortgages.
The financial institution therefore has an interest rate exposure for the - as yet unknown - prepayments by customers of its fixed interest rate product.
