ABSTRACT
Money is fungible, which means that it can be used in a variety of ways. For instance, it can be invested in
U.S. Treasury Bills
,
bonds
issued by
governmentsponsored enterprises
such as
Fannie Mae, Freddie Mac
, or the TVA,
commercial paper
,
corporate bonds
, certificates of deposit,
interest rate swaps
, mortgages, or placed under your mattress. Hence, one needs to understand at least the basics of these many opportunities as short-and long-term alternatives, or complements, to mortgage investments. This chapter is a brief overview of these common selections to mortgage-related ventures. The mathematics underlying the basic pricing for these certificates is also included and serves as a prelude to pricing and valuing mortgages.
