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Interest payments are contractual payments. They need to be specified with an exact formula. For a given set of cash flows, one could come up with a multitude of formulae that end up giving the same values. In order to make interest rates comparable, laws, regulations, and market conventions specify that different conventions be used. Of these conventions, ...


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Depends on the structure. In the US, most residential MBS are pass-through, so the MBS is prepaid. In Canada, MBS are (or at least were) mostly packaged into non-passthrough structures, so MBS cash flows follow fixed coupon schedule. There are prepayment penalties which are used to absorb the cash flows. My understanding is that European pfandebriefe ...


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In the earlier model the fixed investment was a simplifying assumption made for didactic reasons (you dont want to overwhelm students), rather than because investment is actually fixed in general. In fact, it is not exogenous even in a full circular flow model (what you probably seen were simplified versions), but in a full circular flow model investment is ...


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Even if a company pays no dividends, its price will usually reflect its "fundamentals" or "how well it's doing". This is because: If the price is too low (relative to any metric, be it earnings, growth, etc.), then anyone can profitably launch a takeover/acquisition bid. Example. A company has 1B shares each priced at \$1 (so market cap ...


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Short answer is market values change when perceptions of the market valuation of the stock changes between at least one buyer and one seller in the last trade of shares. Long analysis first watch this video by Aswath Damodaran On The ‘Dark Side Of Valuation’: https://www.youtube.com/watch?v=3DtpkMOjH7s Then read his 50 page paper The Dark Side of Valuation: ...


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