break-even payment rate

Definition

The rate at which an MBS coupon would be prepaid so that it will give the same CFY that a particular benchmark MBS coupon would give. For those coupons that exceed the benchmark coupon, this is helpful in determining the rate of the prepayment that will give the same CFY as the benchmark coupon. For those coupons that are below the benchmark coupon, this rate will help in determining the lowest rate of prepayment that will give the same CFY as the benchmark coupon.
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breakeven formula break-even point