Building blocks of a pass-through security, Financial Management

Assignment Help:

The main aim of securitization that was initiated in the late sixties was to resolve problems of mismatch and protect the US mortgage financing system from macroeconomic instability without forgoing, and credit rationing the presumed US friendly standard fixed-rate level payment mortgage which carried a fixed coupon interest rate, constant annuity payments, fixed maturity usually of 30 years and with an option for the borrower to repay fully or partly with the exercise price at par and without any termination option for the lender.

As the intermediary finally can sell only the cash flows contained in his asset portfolio, the mortgage design needs a relatively intricate long-term refinancing instrument which is a very long-term, fixed rate and callable refinancing vehicle. This could be attained by a combination of different varieties of instruments. Securitization of the entire package was seen as an elegant alternative. As a substitute of a complex on-balance sheet refinancing tool, the investor is offered exactly the cash flows that mortgage borrowers choose to make.


Related Discussions:- Building blocks of a pass-through security

Do you agree or disagree with this statement, Companies with rapidly growin...

Companies with rapidly growing levels of sales do not need to worry about raising funds from outside the firm.  Do you agree or disagree with this statement?  Explain. Disagree

T - account of the banking system - equilibrium, Suppose that the Fed buys ...

Suppose that the Fed buys $1 million of bonds from the First National Bank. If the First National Bank and all other banks use the resulting increase in reserves to purchases bonds

Liquidity risk, what role do core deposits play in predicting the probabili...

what role do core deposits play in predicting the probability distribution of net deposit drains

International financial system, International financial system has always b...

International financial system has always been a debatable and crucial focus of the world discussion and it is mainly due to the repression of the economies especially after the cu

Explain about the term- contingent liabilities, Explain about the term- Con...

Explain about the term- Contingent liabilities Under IAS 37 provisions, contingent assets and contingentliabilities, contingent liabilities aren't recognised in the financia

Financial statements of home retail group, Briefly outline the necessities ...

Briefly outline the necessities of the UK version of ISA 700/ 750/ 706 and discuss the factors which would manipulate you as the external auditor in forming an opinion on the finan

Identify an analytic theme for fictitious business, 1. identify an analytic...

1. identify an analytic theme or goal for a fictitious business or something that you are working on (e.g. Maximize revenue in a car dealership) 2. Build an Enterprise Bus Matri

Calculate the break-even point, A Video Rental store has two employees. The...

A Video Rental store has two employees. The Supervisor is paid $2,200 per month. The other employee, Mark is paid $1,200 per month. In addition, Mark is paid a commission of 20 cen

Traditional approach of financial management, Q. Traditional Approach of Fi...

Q. Traditional Approach of Financial Management? Traditional Approach: - Under this schema the role of financial management was limited to the procurement of funds on suitable

FDD , fimnancial accounting system

fimnancial accounting system

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd