The difference between the par value of a bond and the cost of the bond, when the cost is above par.
Measure of how quickly principal is repaid to investors in mortgage securities.
The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed.
A financial institution (1) that is a trading counter party with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market.
Prudent expert rule
A standard of care which fiduciaries must exercise. It states that in the investment of the fund, the fiduciaries shall act with the care, skill, prudence and diligence under the prevailing circumstances that a prudent person acting in a like capacity and familiar with such matters would use.
Prudent investor rule
The trustee is under a duty to the beneficiaries to invest and manage the funds of the trust as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the trust.
Prudent person rule
A standard of care which fiduciaries must exercise. It states that in the investment of the fund, the fiduciaries shall exercise the judgment and care under the circumstances then prevailing which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for the purpose of speculation, but with regard to the permanent disposition of funds, considering the probable income, as well as the probable safety, of their capital.
PSA Standard Prepayment Model (PSA)
A measure of mortgage prepayment activity. The model is expressed as a monthly series of annual prepayment rates. The series begins at .2% per year in the first month, and increases by .2% per year in each successive month until month 30, where it levels out at 6% per year until maturity. This series is labeled 100 PSA. 200 PSA doubles this series, and 50 PSA would cut the series in half.