Mortgage originators offer borrowers various combinations of quot;pointsquot;--loan fees--and coupon: high points and low coupon or low points and high coupon. In this paper points are interpreted as a device serving to separate borrowers with high prepayment probabilities from those with low...

This article reviews the theory of speculative bubbles. Bubbles are a promising candidate as an explanation for the stock price run-up and collapse of the 1990s in the United States. The theory considers both irrational and rational bubbles, with emphasis on the latter. Rational bubbles, defined...