| dc.description.abstract | Because of aging population and low fertility rate, the youth cannot afford rapid growth of the elderly population in the future. In order to provide certain guarantees for the retirement life and funds needed by the elderly, government subsidies alone may not necessarily be able to hedge against inflation. In addition, senior citizen will feel losing their self-esteem when they are too dependent on their children. A traditional concept of having private land in Taiwan results in high homeownership rates. Therefore, this paper would like to study an emerging commodity, reverse mortgage, in this aging society.
This paper will summarize the feature of products regarding reverse mortgage provided by every banks, and take the contract issued by The Shanghai Commercial & Saving Bank for example. There are three models in this study. First, in mortality models, we use Lee & Carter model. Second, in housing price model, we use Brownian motion. Third, in interest rate models, we use CIR model proposed by Cox et al. | en_US |