Bond Sectors and Bond Instruments II by Edu Pristine

Author of lecture Bond Sectors and Bond Instruments II

Edu Pristine

Customer reviews

Excerpts from the accompanying material

... creating a collateralized mortgage obligation Prerequisite. What ...

... example. "This is complex version of a mortgage passthrough security. The payments are not disbursed in the proportion of the holding. Tranches are created out of the passthrough security. These Tranches have varying properties. For ex: A CMO with Tranche I, II and III maybe structured such that Tranche I is repaid first followed by Tranche II and Tranche II." The reason for creating a CMO ...

... invest in a particular Tranche as per theirrequirements depending ...

... The main motivation for creating a collateralized mortgage obligation (CMO) is to redistribute which type ...

... the cashflows from the mortgage pool & allocates scheduled payments as well as prepayments sequentially over time to holders of different CMO tranches. CMO structure does not mitigate the prepayment risk but redistributes ...

... maturities 2. Which of the following is not an reason for creating a CMO: A. to reduce the total risk ...

... in the United States and distinguish between tax-backed debt and revenue bonds ...

... "Public credit enhancement; gauranteed by the state/local government." Municipal Bonds are securities issued by the state and local government in the US. Thses can be either taxable or tax exempt bonds. The two types of securities issued are: Tax-backed Bonds: are bonds which are backed by the taxing ...

... higher risk compared to GO debt as the Issuer is obligated to pay the interest and principal amount only if the project generates adequate revenues. GOs need to be serviced irrespective of the amount of tax collected by the Municipality "Insured Bonds: are bonds which carry the gaurantee of a third party" Prerefunded Bonds: are bonds for which Treasury Securities, sufficient to make ...

... GO bonds1. Which of the following municipal bonds typically has greater risk and is issued with higher yields. A. ...

... insurance company to pay the principal and/or coupon payments in case the municipality do not make the payments to the bond holders. Statement 2: A prerefunded bond guarantees it s obligations by placing a portfolio of government securities in a SPV. Which of the two statements is ...

... is incorrect as the securities are ...

... issued bP corporations (including corporate bonds medium term notes commercial paper negotiables and bankers acceptances) ...

... are placed on the shelf and issued by the company as and when it requires. The issues range ...

... These are basically debt securities that also contains an embedded derivative component. One example is Equity Linked Notes (ELNs) where in the return on the debt ...

... of Structured Medium Term Notes "Step up Notes", "Inverse Floaters", Deleveraged Floaters ...

... from 2 days to 270 days. irectlplaced paper is sold directly to the investors (large investors). ealerplaced paper is sold to investors through a commercial-paper dealer." ...

... are called Eurodollar CDs "Certificate of Deposit. It is issued by banks to raise money from the public. It is a promise by the bank that they would pay" A Certain Amount + Interest" After a Certain Period". In a particular denomination, Penalty if funds are withdrawn earlier than ...

... following is least likely a characteristic of Commercial paper. A. It is issued ...

... SEC regulation. Since the commercial paper is issued with maturities of 270 days ...

... Higher Yield for lack of liquidity "A New issue which is not registered for sale to public" Also called as Rule 144 A offering" ...