Building blocks of a pass-through security, Financial Management

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.

Posted Date: 9/8/2012 8:04:34 AM | Location : United States







Related Discussions:- Building blocks of a pass-through security, Assignment Help, Ask Question on Building blocks of a pass-through security, Get Answer, Expert's Help, Building blocks of a pass-through security Discussions

Write discussion on Building blocks of a pass-through security
Your posts are moderated
Related Questions
Suggestion Regarding Credit Limit Should It Be Approved Or Not What Should Be The Ammount Of Credit Limit That Electronics Give To Booth Plastics

Social responsibility The firm must decide whether to operate strictly in their shareholders' best interests or be responsible to their employers, their customers, and the soc

The value of node is determined using a methodology called backward induction. The value at any node depends on the future cash flows; therefore, we need to start from

1. role financial intermediaries 2. nature and role of money markets

Q. Merits of accept-reject criteria? Merits of ARR:- (i) Simple: - ARR method is very simple to understand and use. (ii) Complete life time of the project is considered:

Bid The price buyers provide to acquire securities or privacy from sellers.

Illustrate the zero bonds security instruments. Zero coupon bonds are instruments under that a borrower promises, at the recent time, to pay one exact nominal sum (face value)

Do you guys provide Efficient Cash Management assignment help? I need writing a report on Efficient Cash Management.

North Star Company, a U.S. based MNC, is considering to establish a subsidiary to capitalize on the removal of Eastern European border restrictions. The subsidiary would manufactur

Weighted Aggregates Index   In a weighted aggregates index, weights are assigned according to their significance and consequently the weighted index improves the accuracy of the