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Business Definition for: adjusted exercise price
adjusted exercise price

term used in put and call options on Government National Mortgage Association (Ginnie Mae) contracts. To make sure that all contracts trade fairly, the final exercise price of the option is adjusted to take into account the coupon rates carried on all GNMA mortgages. If the standard GNMA mortgage carries an 8% yield, for instance, the price of GNMA pools with 12% mortgages in them are adjusted so that both instruments have the same yield to the investor.

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