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

How do financial managers calculate the average tax rate, How do financial ...

How do financial managers calculate the average tax rate? Average tax rates are computed by dividing tax dollars paid by earnings before taxes (EBT).

Debt and coverage ratios, The ability of a firm to satisfy its debt o...

The ability of a firm to satisfy its debt obligations can be assessed using three sets of ratios: Short-term solvency ratios Capitalization

Management accounting, Management Accounting: Management accounting on ...

Management Accounting: Management accounting on the other hand tends to focus internally. Reports generated through management accounting processes will be used by the organisa

Types of rating - shadow rating, The issuer will not have to disclose...

The issuer will not have to disclose the rating to the public. The firm can, either independently or with the help of its investment banker, assess its shadow

What to do to maximise profits of the company, What to do to maximise profi...

What to do to maximise profits of the company If you want to maximise profits, there are only two methods to do it. Either you decrease your expenses (also known as costs) or y

Clearing and settlement - t- bills, Clearing and Settlement The Treasur...

Clearing and Settlement The Treasury Bills are available in physical form if an investor desires so. The market is mostly dominated by institutional players who have a facility

Explain performing the capital budgeting analysis, Explain the difference b...

Explain the difference between performing the capital budgeting analysis from the parent firm’s perspective as opposed to the project perspective. The aim of the financial mana

Effective use of focused marketing, a) A niche market refers to a lucrative...

a) A niche market refers to a lucrative and small market segment. Marketing strategy is targeted and concentrated at this specific market segment. Pink Ladies are specifically targ

Explain contingent exposure, Explain contingent exposure and define the adv...

Explain contingent exposure and define the advantages of using currency options to manage this type of currency exposure. Answer: Companies may come across a state where they m

Leverage, What are the importance of leverage on a small scale firm?

What are the importance of leverage on a small scale firm?

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