Suppose that a tranche from which an inverse floater is created has an average life of five years. What will the average life of the inverse floaterbe?
Answer to relevant QuestionsThis quotation is taken from a 1991 issue of BondWeek: First Interstate Bank of Texas will look into buying several different types of collateralized mortgage obligation tranches when it starts up its buy program sometime ...Suppose that for a securitization with a shifting interest mechanism you are given the following information for some month: subordinate interest = 25% shifting interest percentage = 85% regularly scheduled principal payment ...Suppose that the loans in the collateral pool for a nonagency RMBS deal have a floating rate. What is the risk associated with issued fixed-rate bond classes? Answer the below questions. a. What is the difference between credit tranching and prepayment tranching? b. Why would there be both types of tranching in a nonagency deal but only one type of tranching in an agency deal? Answer the below questions. a. How does a single-borrower/multiproperty deal differ from a conduit deal? b. What is meant by a fusion conduit deal?
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