Skip to main content

Commercial loan borrower's optimal borrowing and prepayment decisions under uncertainty

Buy Article:

$51.63 plus tax (Refund Policy)

Abstract:

We model a firm which faces continuing stochastic money needs and fluctuating interest rates. The borrower minimizes the expected present value of the sum of interest payments and prepayment penalty costs subject to a liquidity constraint. Since contingent opportunities are absent from the model, we find (i) the firm should not inventory cash, (ii) the firm should prepay the maximum amount possible if it prepays at all.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840500461972

Affiliations: Graduate School of Management, Ming Chuan University, Taipei, 105, Taiwan

Publication date: May 1, 2007

More about this publication?
routledg/raef/2007/00000039/00000008/art00006
dcterms_title,dcterms_description,pub_keyword
6
5
20
40
5

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more