Abstract
The MBS market plays a big role in the funding of mortgages in the Russian Federation. The Russian mortgage bonds are planned to have attractive features for investors. However, some mortgage bond issues do not have fixed coupon rates. The article proposes an approach to the determination of interest rates for the Russian mortgage-backed securities. The algorithm is based on a calculation of the required rate of return on the MBS and a calculation of the MBS cash flows from a cover pool of mortgages to determine the annual MBS coupon rate.
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