Carson company currently has a mortgage on its office, Ask an Expert

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Carson Company currently has a mortgage on its office building through a savings institution. It is attempting to determine whether it should convert its mortgage from a floating rate to a fixed rate. Recall that the yield curve is currently upward sloping. Also recall that Carson is concerned about a possible slowing of the economy because of potential Fed actions to reduce inflation. The fixed rate that it would pay if it refinances is higher than the prevailing short-term rate but lower than the rate it would pay from issuing bonds.

• What macroeconomic factors could affect interest rates and therefore affect the mortgage refinancing decision?

• Which type of mortgage risk is the most difficult to overcome, in your opinion? Why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92354515

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