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!
A mortgage may be defined as a pledge of property to secure payment of a debt. Depending upon the terms of mortgage agreed upon between the lender and the borrower, mortgages can be classified into traditional and non-traditional mortgages.
Securitization is the process of aggregating similar instruments, such as loans or mortgages, into a negotiable security.
A Mortgage Backed Security (MBS) is a bond financed by home mortgage payments. This is the essential concept behind the mortgage backed securities definition. The mortgage principal and interest paid by the homeowner is the principal and interest paid to the MBS holder. The basic mortgage-backed security is the mortgage pass-through security which is created from a pool of mortgage loans.
There is always a prepayment risk attached with investing in mortgage pass-through securities. Prepayment can be defined as the amount paid in excess of the required monthly mortgage payment. Due to prepayment, the cash flow of a mortgage-backed security is unknown. The risk of prepayment makes it a less attractive instrument to hold for some financial institutions from an asset/liability perspective.
Collateralized Mortgage Obligations (CMOs) retain many of the yield and credit quality advantages of pass-throughs, while eliminating some of the less desirable elements of the traditional mortgage-backed security. CMOs are bonds or debt obligations issued by mortgage originators by offering whole loan mortgages or mortgage pass-through securities as collateral. The cash flows generated by the assets in the collateral pool are first used to pay interest and then pay principal to the CMO bondholders.
The CMO structure offers issuers a flexible tool with which to design tranches to meet investor needs and respond to market conditions. Some of the tranches designed to reduce an investor's exposure to prepayment risk are sequential-pay tranches, planned amortization class (pac) tranches, support or companion tranches, accrual bonds (z bonds), floating-rate tranches.
A stripped mortgage-backed security is a derivative mortgage-backed security that is created by redistributing the interest and principal payments to two different classes viz. principal-only mortgage strip ( PO ) and the Interest-only mortgage (IO) strip. While OP strip benefits from declining interest rates and fast prepayments, the IO strip benefits from rising interest rates and a slowing of prepayments.
A non-agency mortgage-backed security does not carry precise government guarantee of payment of interest and principal as there is with an agency security.
Commercial Mortgage-Backed Securities (CMBS) are securities that are backed by income-producing real estate, usually in the form of warehouses, shopping centers, apartments, office buildings, senior housing, health care facilities, and hotel/resort properties.
International mortgage-backed securities are nothing but mortgage-backed securities that are issued in a country by a non-domestic entity.
What can a financial institution Frequently do for a deficit economic unit (DEU) that it would have difficulty doing for itself if the DEU were to deal directly along with an SEU?
State about the investigate of Competition Directorate Competition Directorate will generally investigate the below areas: (i) Mergers and takeovers This is when larg
Why do we focus on cash flows in place of profits when evaluating proposed capital budgeting projects? We focus on cash flows in place of profits while evaluating proposed capita
Problems in primary market?
182-Day T-Bills Following the Sukhamoy Chakravarty Committee recommendations, in November, 1986, 182-day T-bills were introduced in order to develop the short-term money market
Types of Bonds 1. Secured Versus Unsecured Bonds 2. Senior versus Subordinate Bonds 3. Registered and Unregistered Bo
you just started your first job, and you want to buy a house within 3 years. you are currently saving for the down payment. you plan to save $5,000 the first year. You also anticip
Treasury Bills in International Markets A brief discussion on treasury bills in international markets is given below: Primary Market T-bills are important money market
Relationship between Bond Price and Time (If Interest Rates are Constant) The bond price changes as the bond moves closer to its maturity. If the bond is quoted
What are the Objectives or goals of Financial Management? Objectives of Financial Management: - It is the responsibility of the top management to lay down the objectives or goa
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