Gross Coupon
Contents
Unlocking the Mystery of Gross Coupons in Mortgage-Backed Securities
Understanding Gross Coupons
Delve into the world of mortgage-backed securities (MBS) with an exploration of gross coupons. Learn how these coupons are calculated and their significance in assessing the relative yield of different MBS products. Discover the key differences between gross coupons and weighted average coupons.
The Mechanics of Gross Coupons
Explore how gross coupons are derived from the average coupon rates of individual mortgages within an MBS portfolio. Understand the impact of administrative and service fees on gross coupons, resulting in a lower net coupon for investors. Gain insight into the factors that influence MBS investor returns and the monthly payout structure.
Real-World Application
Follow Dorothy's journey as she navigates the realm of fixed-income investments and considers the allure of MBS. Discover how gross coupons play a role in her investment decision-making process and how they compare to weighted average coupons in assessing MBS potential.