This paper uses a numerical simulation based on the Crank-Nicolson method to estimate the value of a fixed-rate mortgage (FRM) with embedded prepayment and non-defaultable options. We find that the value of the FRM will increase when interest rates decrease, increasing the incentive for...

This paper discusses a research strategy which determines the optimum capital structure strategy and sets a reasonable required return of two-dimensional mortgages for borrowers and lenders with trade-off theory. We derived the optimum capital structure strategy of REITs and assess the mortgage...