Topic 2 Securities

Topic 2 Securities - Topic2 SecuritiesandIndices FIN4504...

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Topic 2 Securities and Indices FIN 4504 Aaron Gubin
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Overview • Debt • Equity – Preferred – Common • Indices • Derivatives A. Gubin, FIN 4504 2
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Money Markets • Short-term debt securities – T-bills – Federal funds – CDs – Commercial Paper A. Gubin, FIN 4504 3
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Longer Term Debt • Bonds – T-notes and T-bonds – Agency Debt – Munis – MBS – Corporates A. Gubin, FIN 4504 4
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Securitization A. Gubin, FIN 4504 5 Number of Homeowners          1,000  Interest Pmts Bond Ibank Value of a Mortgage $     100,000  Turnover Number of  Received Payments Profit Interest Rate 5% Rate Homeowners ($ millions) Annual Payment $       5,000  0% 0  $             5.0           4.0   $      1.0  Total Mortgage Value ($ millions)            100  2% 20                 4.9           4.0   $      0.9  5% 50                 4.8           4.0   $      0.8  Principal Payments 10% 100                 4.5           4.0   $      0.5  ($ millions) Coupon ($ millions) 20% 200                 4.0           4.0   $        -   AAA                40 
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Topic 2 Securities - Topic2 SecuritiesandIndices FIN4504...

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