Business and Personal Finance Dictionary

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• LEVEL FACTOR AMORTIZATION
  
  Perhaps the best method of accounting for MBS premiums and discounts is the change in factor or level factor amortization method. Under the change in factor method, the amount of monthly premium amortization or discount accretion is calculated to be proportionate to the amount of the monthly principal payments. The alternative amortization method is called the effective interest method.
  
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