What risks of securitization should the managers of lending institutions be aware of?
Answer to relevant QuestionsSuppose that a bank securitizes a package of its loans that bears a gross annual interest yield of 13 percent. The securities issued against the loan package promise interested investors an annualized yield of 8.25 percent. ...How do credit options work? What circumstances result in the option contract paying off?What type of credit derivatives contract would you recommend for each of the following situations:a. A bank plans to issue a group of bonds backed by a pool of credit card loans but fears that the default rate on these ...How is the expected yield on most bonds determined?What maturity strategies do financial firms employ in managing their portfolios?
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