Alys

Payment Shock Definition.

by

A payment shock is when a borrower’s mortgage payments increase suddenly and dramatically. This can happen if the borrower has an adjustable-rate mortgage (ARM) and the interest rate goes up, or if the borrower has a fixed-rate mortgage but their income decreases. Payment shocks can also happen when a borrower’s mortgage payments increase because they’re … Read more

Option Premium Definition.

by

Option premium is the price of an options contract. It is the amount that the buyer pays to the seller for the right to buy or sell an underlying asset at a specified price on or before a specified date. The premium is composed of two parts: the intrinsic value and the time value. The … Read more