Taxes, discount points, and the intrinsic value of the prepayment option.

Title: Taxes, discount points, and the intrinsic value of the prepayment option.
Identifier: AAI9009789
identifier: 9009789
Creator: Stone, Charles Austin.
Contributor: Adviser: Ronald Anderson
Date: 1989
Language: English
Publisher: City University of New York.
Subject: Economics, General | Economics, Finance
Abstract: Confronted with an array of contract rate/discount point combinations from which he may choose, a mortgagor must evaluate his wealth with respect to each choice. The future path of the cost of mortgage capital will affect the wealth of the mortgagor to a different degree depending on which contract rate/discount point combination he chooses. Using the Expected Monetary Value algorithm, we show that variation, of marginal income tax rates and expectations about the future path of the cost of mortgage capital across mortgagors, can explain the demand for different contract rate/discount point combinations. Our results provide a rational for a mortgagor choosing an intermediate point/contract rate combination.
Type: dissertation
Source: PQT Legacy CUNY.xlsx
degree: Ph.D.

Media: Taxes, discount points, and the intrinsic value of the prepayment option.