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Human beings spend their daily lives within the range of the atmospheric boundary layer, where airflow is affected by friction from Earth's surface. The airflow in this area is generally called wind. Strong wind occasionally causes severe damage to infrastructures and people because of its aerodynamic effects, but even weak and moderate winds can have serious environmental impacts on human society such as those seen with air-pollution problems and thermal effects.

The purpose of this paper is to generalize the one‐factor mortgage‐backed securities (MBS)‐pricing model proposed by Kariya and Kobayashi to a three‐factor model. The authors describe prepayment behavior due to refinancing and rising housing prices by discrete‐time, no‐arbitrage pricing theory, making an association between prepayment behavior and cash flow patterns.

The structure, rationality and potential for practical use of our model is demonstrated by valuing an MBS via Monte Carlo simulation and then conducting a comparative static analysis.

The proposed model is found to be effective for analysing MBS cash flow patterns, making a decision for bond investments and risk management due to prepayment.

While the one‐factor valuation model Kariya and Kobayashi treated is a basic framework, the generalized model presented in this paper is much more effective for analysing MBS cash flow patterns, making a decision for bond investments and risk management due to prepayment.