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Discuss the adverse selection problem

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-Discuss why mortgage prepayment is a concern to holders of mortgage passthrough securities. Discuss the different models that have been used to estimate the prepayment rate. What has economic research found to be the most important variables that affect prepayment?

-Discuss the two theories of mortgage default. What are the most important factors that influence the likelihood of default? Discuss the alternatives to default from the lender's perspective and the incentives lenders face to offer them.

-Discuss the difference between the two major government insurance programs and private mortgage insurance. How do they differ during the foreclosure process? Discuss the adverse selection problem as it relates to the mortgage insurance market.

-Discuss why some argue that the optimal capital structure involves using as much debt as possible when investing in real estate. What are the counterarguments to this theory? Discuss the practical considerations that may apply when choosing a capital structure for a real estate investment.

-Real Estate Investment Trusts (REITs) have become a popular form of ownership for real estate. Discuss the advantages of REITs for investors. Discuss the different types of REITs. Why are REITs a unique vehicle for studying capital structure decisions? What does the research suggest regarding the optimal capital structure of REITs?

Reference no: EM133115471

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