Note Valuation

[Andy M]

Hi,

I'm wondering how you guys value notes?

If there were no chance of default or early payment of the note, then the note's value would simply be the sum of the time-discounted future payments.

Of course there is the chance of default, so the credit score of the person making the payments and also the value of the collateral secured by the note should be taken into account.

The person could also prepay the note (possibly with a penalty). Do you use historical data to evaluate the chances of prepayment?

Andy