What is the purpose of asset securitization

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Questions: 1. What is the purpose of asset securitization?

2. What are the main features of the credit cards in the BOA ABS?

3. What are the main risk factors?

4. Calculate the annual YTM for one bond based on the current price assuming that the price was quoted at the beginning of the bond issue. Use the LIBOR rate + spread to calculate the monthly payments for the bond.

5. Would you recommend an institutional investor to invest in these bonds? Why or Why not?

6. Why would a company issue a floating rate bond? What is the risk to the company?

7. What is the benefit to a bank from offering repurchase agreements to its corporate customers?

8. What are reverse repos? How are they used banks, companies, and the Fed? Explain the sequence for the result on the money supply.

9. Calculate the interest earned on a $123,789,456 repo for 1, 2, and 3 days. Use the current repo rate as reported in the Wall Street Journal. If this were done every day for a year, how much interest would the company earn? Is this worthwhile for the company?

10. An equity swap can only benefit one side of the transaction. Do you agree or disagree? Why?

Reference no: EM131440455

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