Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
In a pass-through structure, each certificate holder will be allotted a proportion of the cash flow from the underlying pool of loans or receivables on a pro rata basis. Suppose an asset-backed security has the following structure:
Senior tranche Rs.100 crore (1000 certificates issued),
Subordinated tranche Rs.10 crore (100 certificates issued).
In the above structure, each certificate holder of the senior tranche and subordinated tranche would receive 1/1000 and 1/100 of the cash flow to be paid to the senior tranche/subordinated tranche from the collateral respectively.
In a pay-through structure, while a senior tranche can be split into different tranches, a subordinated tranche cannot be done so. The combined par value of the components of the senior tranche will be equal to the par value of the original senior tranche.
Let us recall that the senior-subordinated structure is useful to minimize the credit risk. This is because the loss in the deal can be met from the funds in the subordinated tranche. Thus, credit risk is redistributed from the senior tranche to the subordinated tranches. This process is referred to as credit tranching. If the senior tranche is split-up into different tranches each with different exposure to prepayment risk in a pay-through structure, prepayment risk is redistributed among the components of the senior tranches. This process is referred to as prepayment tranching or time tranching.
Q. What is Deferred Incomes? Deferred incomes are incomes received in advance before supplying goods or services. They represent funds received by a firm for which it has to su
Leveraging can be described as an investing principle where funds are borrowed to invest in a part of the securities. The manager hopes to earn a return that is g
The net income of Novis Corporation is $45,000. The company has 20,000 outstanding shares and a 100 percent payout policy. The expected value of the firm one year from now is $1,
Process The process of Securitization involves the following steps: Transfer of assets by the originator (person holding the assets) to an entity (comp
Presently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The three-month interest rate is 8.0% per year in the U.S. and 5.8% per year in t
Specialized Stock Indexes The most regularly quoted market indices are those that include the stocks of the largest listed companies on a nation's largest stock exchange. Examp
External Financing with Same Cost of Capital and Same Proportions as Existing: If a firm raises new capital funds in the same proportion as at present and at the same specific cos
Illustration Find out the value of zero-coupon bond when maturity value is Rs.1,00,000, discounting rate is 12%, and the period is 25. Then,
Q. What is Alternative Minimum Tax? Alternative Minimum Tax (AMT) - Tax imposed to back up the regular income tax imposed onCORPORATION and individuals to guarantee that taxpay
State the major decision of financial management The major decision of financial management is the decision relating to dividend policy. The dividend must be analysed in relat
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd