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

Explain the financial desirability of burley plc, BURLEY PLC Financial...

BURLEY PLC Financial desirability In a real-terms analysis the real rate of return necessary by shareholders has to be used. This is found as follows 1 nominal rate/1 i

Regulatory requirements for debentures, The following guideline...

The following guidelines are applicable for the issue of Fully Convertible Debentures (FCDs), Partly Convertible Debentures (PCDs) and Non-conve

Wcr expense ratios, Scenario:  ABC Company sells widgets in three varietie...

Scenario:  ABC Company sells widgets in three varieties (blue, red, and yellow) but has lost money for the past three years.  Competitive intelligence shows the Company's products

Operating cycles, use the operating cycle to formulate a broiler business

use the operating cycle to formulate a broiler business

Ratchet bonds, The coupon rate of these types of bonds is adjusted pe...

The coupon rate of these types of bonds is adjusted periodically at a fixed margin over a reference rate. It can be adjusted southward only and once it is adjuste

Write out the equation or draw the budget line, You have $21 to spend on pr...

You have $21 to spend on prawns and potatoes. Prawns cost $20 per kilo and potatoes cost $2 per kilo.   (a) Supposing you can buy as much or as little as you want of prawns and

Explain concept of returns, Meaning of Returns The return from holding a...

Meaning of Returns The return from holding an investment over some period - say, a year, is simply any cash payments received due to ownership, plus the change in market price,

Why iceq go beyond icq, ICEQ'sgo beyond ICQ's Discover whether erro...

ICEQ'sgo beyond ICQ's Discover whether error or fraud is possible. Concentrates on significant frauds or errors which might be possible and so only a handful of key con

OPERATING CYCLE, discuss the applicability of operation cycle in avegetab...

discuss the applicability of operation cycle in avegetable growing business

Determine the limitations of trade receivable day ratio, Determine the Limi...

Determine the Limitations of trade receivable day's ratio Year-end trade receivables may not be representative of the year. Credit sales are VAT exclusive in the Incom

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