Resumen de Essays on finance and social choice theory
his thesis is composed of three articles two of which emphasizes on different aspects and applications of mortgage derivative pricing in Turkey and one of which is on social choice theory. The first article is on pricing of mortgage insurance (MI) which is used to eliminate the default risk to the lenders. There are many methods used in MI pricing in the market. This article investigates two of these methods and proposes an extension. The second article is on prepayment penalty which used to eliminate the prepayment risk. Here we investigate the value of the prepayment option under different prepayment penalty sizes, since the value of the prepayment option shows the present value of the prepayment risk. It concludes that the current restriction on prepayment penalty in Turkish mortgage market, 2%, does not seem to be effective enough in order to eliminate the prepayment risk. The third and the last article is of another field of economics, namely social choice theory. We know that there are social choice problems over which no scoring rule is "Maskin monotonic". The third article characterizes "the minimal monotonic extensions" of scoring rules. The aim of the first part of this study is to produce policy implications for Turkish mortgage market whose legal infrastructure has recently been finished and accepted by the Turkish Parliament in February 2007. That is why the results may serve as a benchmark in both mortgage insurance pricing and prepayment pricing in this market . The aim of the last article is to show the minimal monotonic extensions of some well-known voting rules in order to make them Nash-implementable
