E
Extension
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(1) The tendency of some mortgage pools to prepay principal more slowly than average or than predicted by standard formulas. (2) An agreement between the buyer and the writer of an over-the-counter derivative instrument to lengthen the life of the contract beyond the original expiration date. Extensions are not common because both parties have to agree to the extension and to the price to be paid for it. There is no mechanism for extension of a specific listed option or futures contract. See also Expiration Date (1).
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Glossary *
E
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