What you'll learn:
- explain benefits of securitization for economies and financial markets;
- describe securitization, including the parties involved in the process and the roles they play;
- describe typical structures of securitizations, including credit tranching and time tranching;
- describe types and characteristics of residential mortgage loans that are typically securitized;
- describe types and characteristics of residential mortgage-backed securities, including mortgage pass-through securities and collateralized mortgage obligations, and explain the cash flows and risks for each type;
- define prepayment risk and describe the prepayment risk of mortgage-backed securities;
- describe characteristics and risks of commercial mortgage-backed securities;
- describe types and characteristics of non-mortgage asset-backed securities, including the cash flows and risks of each type;
- describe collateralized debt obligations, including their cash flows and risks.
This coursediscusses the benefits of securitization, describes securitization, and explains the investment characteristics of different types of AssetBackedSecurities (ABS). The terminology regarding ABS varies by jurisdiction. A mortgage-backed security (MBS) is an ABS backed by a pool of mortgages, and a distinction is sometimes made between MBS and ABS backed by non-mortgage assets. This distinction is common in the United States, for example, where typically the term “mortgage-backed securities” refers to securities backed by high-quality real estate mortgages and the term “asset-backed securities” refers to securities backed by other types of assets. Because the US ABS market is the largest in the world, much of the discussion and many examples in this reading refer to the United States.
This course will help the student understandthe importance of securitization from a macroeconomic perspective. I will be discussingthe benefits of securitization for economies and financial markets, talking about securitization and identifying the parties involved in the process and their roles. I shall also discusses typical structures of securitizations, including credit tranching and time tranching. Further more, Iwill be talking aboutsecurities backed by mortgages for real estate property, focusing on thetypes of residential mortgage designs,residential MBS and commercial MBS, respectively. I will concludethe course with a lecture onCollateralized debt obligations.
This course is very useful for anyone interested in entering the Fixed Income field of Investments, especially those entering the ABSarena.