Prepayment Risk definition

Prepayment Risk. The risk that, during periods of falling interest rates, borrowers may pay off their mortgage loans sooner than expected, forcing a mutual fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
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Prepayment Risk. Prepayment risk applies to mortgage-backed securities. This risk exists when borrowers pay off their mortgage loans faster than anticipated, which may cause an owner of mortgage-backed securities to reinvest principal proceeds at lower prevailing interest rates. Regulatory Risk: Regulatory risk exists when potential changes in the regulation of securities markets or in the broader economy negatively impact the prices or liquidity of securities held in an investment fund. Investment Risk by Fund Option Money Market U.S. Bond U.S. Stock Int’l Stock Active Trading Risk ● Call Risk ● ● Country/Political Risk ● ● Credit Risk ● ● Currency Risk ● ● Derivatives Risk ● Duration/Interest Rate Risk ● ● Equity Market Risk ● ● Extension Risk ● ● Income Risk ● Index Sampling Risk ● ● ● Liquidity Risk ● ● ● Prepayment Risk ● ● Regulatory Risk ● ● ● ● TAX CONSIDERATIONS The information provided in this PDPA should not be deemed as tax advice. The tax information provided herein is solely intended for informational purposes and to support the marketing of the Program. The tax information herein may not be used for the purpose of avoiding the payment of taxes or penalties under the Code. Carefully review the tax considerations and consult your own tax advisor with respect to your specific circumstances.
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Prepayment Risk. Similar to call risk, in case of individual bonds, including mortgage-backed bonds, prepayment risk is the risk that the issuer of a security will repay principal prior to the bond’s maturity date, thereby changing the expected payment schedule of the bonds. Tax Considerations: Income from investments is subject to tax as per the provisions of Income Tax Act, as amended from time to time. The following heads of income from investments are subject to tax, unless specifically exempt: dividend income, interest income and realised capital gain. Income from investments may be in the form of interest or dividend and is taxable as income from other sources. The tax treatment for both these types of income is different. Investment in securities will classify as capital assets as per the definition of Capital Assets under Section 2(14) of the Income Tax Act and a capital gain/loss from the sale or transfer of such asset (also known as realised gains/losses) can be a short term capital gain/loss or long term capital gain/loss depending upon the period for which it was held by the investor (Client) and taxed accordingly. Every purchase and sale of securities (including equity and unit of equity oriented mutual fund) listed on recognized stock exchanges in India also attract a direct tax called Securities Transaction Tax (STT).STT is computed on the amount of redemption or sales value and is reduced from the redemption or sales proceeds paid to the investor (Client). Tax calculated on your investment products depends on factors such as what kind of instruments you have invested in, the duration of your investment, and which income tax slab you belong to. The Client should consult a tax professional or a qualified Chartered Accountant regarding the tax implications of the investing of his assets and the filing of his tax returns. ANNEXURE 2 REPRESENTATION ABOUT THE QUALIFICATION OF THE IA PARTICULARS OF INVESTMENT ADVISER NAME: MR/MS. EDUCATIONAL QUALIFICATION: ANNEXURE 3 DETAILS AND ILLUSTRATION OF REMUNERATION EARNED BY INVESTMENT ADVISER Advisory Fees In case of an investment account, Xxxxx shall provide advice only on zero-commission products where possible and hence shall be remunerated solely through Advisory Fees. This is the ongoing fees for the advisory services provided by Xxxxx to the Client and is charged on the total AUA. The Advisory Fees can be a fixed rate or a percentage of the AUA or a slab wise rate. Asthe Xxxxx Wrap Account is a multi-product accoun...
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Examples of Prepayment Risk in a sentence

  • The other main risks pertaining to Securitised debt are as follows: Prepayment Risk: This arises when the borrower pays off the loan sooner than expected.

  • Prepayment Risk: Certain fixed income securities give an issuer the right to call back its securities before their maturity date, in periods of declining interest rates.

  • Prepayment Risk: The Fund may receive payment of monthly payouts earlier than scheduled.

  • Prepayment Risk: The borrower may repay the receivables earlier than scheduled, which may result in change in the yield and tenor for the Scheme.

  • Consequently, the proceeds may get invested at a lower rate.• Pre-payment Risk: Certain fixed income securities give an issuer the right to call back its securities before their maturity date, in periods of declining interest rates.

  • Delays or other problems in settlement of transactions could result in temporary periods when the assets of the Scheme are not invested and no return is earned thereon.⚫ Prepayment Risk: Certain fixed income securities give an issuer the right to call back its securities before their maturity date, in periods of declining interest rates.

  • When interest rates fall, borrowers are more likely to refinance or prepay their debt before its stated maturity (Prepayment Risk).

  • Pre-payment Risk: Certain fixed income securities give an issuer the right to call back its securities before their maturity date, in periods of declining interest rates.

  • Prepayment Risk A certain amount of prepayments is assumed in the calculations at the time of purchase based on historical trends and estimates.

  • The market prices of zero coupon securities are generally more volatile than the market prices of securities that pay interest periodically.• The Scheme’s performance may differ from the benchmark index to the extent of the investments held in the debt segment, as per the investment pattern indicated under normal circumstances.• Prepayment Risk: Certain fixed income securities give an issuer the right to call back its securities before their maturity date, in periods of declining interest rates.


More Definitions of Prepayment Risk

Prepayment Risk. The risk that the actual prepayment of principal is different from the expected prepayment speed assumptions, thereby affecting the actual market price and yield of the investment. Market Risk — The risk that the market price of the security will decline substantially for reasons such as market pricing aberrations, and changes in supply and demand characteristics of a particular security market(s). Market risk is also used synonymously for Price Risk, which results from some of the previously listed sources as well as other financial variables to which a specific security may be linked for purposes of deriving its interest and principal cash flows. Operating Risk — The potential risk ofloss because of inadequate policies, procedures, controls, error, fraud, etc.
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Related to Prepayment Risk

  • Discount Range Prepayment Amount has the meaning set forth in Section 2.05(a)(v)(C)(1).

  • ECF Prepayment Amount has the meaning assigned to such term in Section 2.11(b)(i).

  • Reinvestment Prepayment Amount with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.

  • Discount Range Prepayment Notice means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C) substantially in the form of Exhibit K.

  • Prepayment Amount means the amount required to prepay the Annual Special Tax obligation in full for an Assessor’s Parcel as described in Section G.

  • Specified Discount Prepayment Amount has the meaning set forth in Section 2.05(a)(v)(B)(1).

  • Prepayment Premium Period means the period during which, if a prepayment of principal occurs, a prepayment premium will be payable by Borrower to Lender. The Prepayment Premium Period is the period from and including the date of this Note until but not including the first day of the Window Period.

  • Prepayment Price Has the meaning specified in Section 6.02(b) of the Indenture.

  • Prepayment means any prepayment, whether in part or in full, in respect of any Receivable.

  • prepayment meter means a meter that can be programmed to allow the flow of pre-purchased amounts of energy in an electrical circuit;

  • Discounted Prepayment Option Notice has the meaning specified in Section 2.05(d)(ii).

  • Prepayment Premiums Any prepayment fees and penalties to be paid by the Mortgagor on a Mortgage Loan.

  • Reinvestment Prepayment Date with respect to any Reinvestment Event, the earlier of (a) the date occurring twelve months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

  • Prepayment Premium means, with respect to the Mortgage Loan, any prepayment premium, spread maintenance premium, yield maintenance premium or similar fee required to be paid in connection with a prepayment of the Mortgage Loan pursuant to the Mortgage Loan Documents, including any exit fee.

  • Discount Range Prepayment Offer means the written offer by a Lender, substantially in the form of Exhibit K, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.

  • Principal Prepayment Amount For any Distribution Date and for any Loan Group, the sum with respect to the Mortgage Loans in such Loan Group of (i) Curtailments received during the Prior Period from such Mortgage Loans and (ii) Payoffs received during the Payoff Period from such Mortgage Loans.

  • Mandatory Prepayment Amount for any Debentures shall equal the sum of (i) the greater of: (A) 130% of the principal amount of Debentures to be prepaid, plus all accrued and unpaid interest thereon, or (B) the principal amount of Debentures to be prepaid, plus all other accrued and unpaid interest hereon, divided by the Conversion Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is less, multiplied by the VWAP on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of such Debentures.

  • Specified Discount Prepayment Notice means an irrevocable written notice of a Borrower Offer of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit I.

  • Discount Range Prepayment Response Date has the meaning set forth in Section 2.05(a)(v)(C)(1).

  • Prepayment Date has the meaning specified in Section 2.05(c).

  • Partial Prepayment Amount means the amount required to prepay a portion of the Annual Special Tax obligation for an Assessor’s Parcel as described in Section H.

  • Proposed Discounted Prepayment Amount has the meaning specified in Section 2.05(d)(ii).

  • Optional Prepayment Price shall have the meaning set forth in Section 14.02(a).

  • Prepayment Notice means a notice by the Borrower to prepay Loans, which shall be in such form as the Appropriate Party may approve.

  • Repayment Amount means the amount to be paid by the Recipient to the OPWC on each payment date of each year during the Term pursuant to the terms and conditions of the Note.

  • Proposed Prepayment Date is defined in Section 8.3(c).