02 Debt - Collateralized & Savings Flashcards by Brandy S | Brainscape

Q

Collateralized Mortgage Obligations (CMO)

definintion
evaluation
risk
backing
yeild
tax

A

pool of mortgage back
PSA, pass thru cert
private label more risky than agency
Ginnie, Fannie, Freddie

5.

all levels

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Q

CDO

A

Collateralized Debt Obligation

Asset backed, non mortgage

organized in tranches

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Q

Tranches

A

maturity classes

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Q

Tranches

PAC

TAC

Zero

time
risk
maturity
yeild

A

Plan Amorization Class

3-4 years
reduced - reinvestment & extension
predicitble
low

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Q

Tranches

PAC

TAC

Zero

time
risk
maturity
yeild

A

Targeted Amorization Class

1+ years
high
unpredictible
high

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Q

Tranches

PAC

TAC

Zero - pmts

A

no pmt until preceding CMOs are paid

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Q

inverse floater

A

repayment of principal extends maturity date 30+ years

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Q

Savings Bonds

A

non marketable securities

no secondary mkt

low income can use int tax free for college

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Q

Savings Bonds

Series EE

Series HH

Series I

timing
holding requirements
tax

A

30 yrs fixed interest

(add monthly paid semi annually)

min 1 yr holding
tax deferred until maturity

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Q

Savings Bonds

Series EE

Series HH

Series I

A

no more

previously only exchange for EE

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Q

Savings Bonds

Series EE

Series HH

Series I

A

interest add monthly

paid when redeemed

tax deferred until maturity

protect purchasing power

int contains - fixed & inflation rate tied to CPI

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Q

refunding

A

raising $ to call by issuing new bonds

refinancing

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Q

pre-refund / advanced refunding

A

new issue sold at lower coupon

before original bond issue can be called

lock in lowe int
int rcvd used to pay int on orig
highest credit rating

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Q

cross over refund

A

escro pays principal

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Q

defeasance

A

term of issuer obligation

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Q

tender offer

A

issuer makes offer higher than par

Q

put / puttable

A

force issuer to buy back once a year

at face val, lower interest

municipal bonds

protects investor against mkt risk