Burning Down The House

60 %
40 %
Information about Burning Down The House

Published on December 9, 2008

Author: taps65



The Drivers of the Housing Meltdown

Burning Down The House

Mortgage Backed Security (MBS), Structured Investment Vehicles (SIV'S), Derivatives, Collateralized Debt Obligations (CDO's) and other follies In finance, a mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. Payments are typically made monthly over the lifetime of the underlying loans. A structured investment vehicle (SIV) is a fund which borrows money by issuing short-term securities at low interest and then lends that money by buying long-term securities at higher interest, making a profit for investors from the difference. SIVs are a type of structured credit product; they are usually from $1bn to $30bn in size and invest in a range of asset-backed securities, as well as some financial corporate bonds. A SIV has an open-ended (or evergreen) structure; it plans to stay in business indefinitely by buying new assets as the old ones mature, and the SIV manager is allowed to exchange investments without providing investors transparency / the ability to look through to the structure.

Derivatives are financial instruments whose value changes in response to the changes in underlying variables. The main types of derivatives are futures, forwards, options, and swaps. The main use of derivatives is to reduce risk for one party. The diverse range of potential underlying assets and pay-off alternatives leads to a huge range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of assets such as commodities, (stocks), bonds, interest rates, exchange rates, or indexes (such as stock market index, consumer price index (CPI) — see inflation derivatives — or even an index of weather conditions, or other derivatives). Their performance can determine both the amount and the timing of the pay-offs. Collateralized debt obligations (CDO's) are a type of asset-backed security and structured credit product. CDO's are constructed from a portfolio of fixed-income assets. These assets are divided into different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher coupons (interest rates) to compensate for the added CDO's serve as an important funding vehicle for fixed-income assets. - The emperor's new clothes.

Add a comment

Related presentations

Les changements sur le marché du distressed aux Etats-Unis et en Europe

Main Sections of the Report 1) Nifty Technical View 2) 4 Large Cap Trade Ide...

This presentation consits the yearly results of Kinepolis Group

Related pages

Talking Heads "Burning Down the House" ‌‌ - Bohemia ...

Talking Heads "Burning Down the House" ‌‌ - Bohemia Afterdark BVMTValternative. Subscribe Subscribed Unsubscribe 40,385 40K. Loading ...
Read more

Burning Down the House - Wikipedia, the free encyclopedia

"Burning Down the House" "This Must Be the Place (Naive Melody)" "Girlfriend Is Better" (live) "Road to Nowhere" "And She Was" "Once in a Lifetime" (live)
Read more

Talking Heads — Burning Down the House — Listen and ...

Watch the video or listen to Talking Heads – Burning Down the House for free. Burning Down the House appears on the album Stop Making Sense. "Burning ...
Read more

Tom Jones — Burning Down The House — Listen and ...

Watch the video or listen to Tom Jones – Burning Down The House for free. Burning Down The House appears on the album Best Of. Tom collaborates with The ...
Read more

Talking Heads - "Burning Down The House" - YouTube

Talking Heads - "Burning Down The House" Edgar Aldrett. Subscribe Subscribed Unsubscribe 11,645 11K. Loading ... Beds Are Burning - Duration: 4:37.
Read more

burning down the house

burning down the house - a photographic study of berlin graffiti writers
Read more

Burning Down The House Lyrics - Talking Heads

Lyrics to Burning Down The House by Talking Heads: Watch out you might get what you're after / Cool baby strange but not a stranger / I'm
Read more

Burning Down the House (2001) - IMDb

With John Savage, James Wilder, Joanne Baron, Ceasar Cavaricci. A down-on-his-luck film director sets fire to his home so he can collect the insurance ...
Read more

Burning Down the House (film) - Wikipedia, the free ...

Burning Down the House is a 2001 film directed by Philippe Mora. Cast. John Savage as Jake Seiling; James Wilder as Arnie Green; Joanne Baron as Brenda Goodman
Read more

"True Blood" Burning Down the House (TV Episode 2011) - IMDb

As all hell breaks loose in Shreveport, Sookie summons her most potent powers yet to save Bill, in the process breaking a spell and leading Marnie/Antonia ...
Read more