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Questions tagged [asset-backed-security]

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8 votes
3 answers
2k views

Are the S&P 500 and Dow Jones Industrial Average securities?

As I understand it these Indexes are baskets of assets that are securities. Does that make the Index itself a security? What about an index of commodities?
Origami's user avatar
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1 vote
1 answer
137 views

What happens to the dividends when you enter into a securities-based line of credit or "portfolio loan"?

For this example let's say you have a stock portfolio that is paying you dividends and you take out a securities-based line of credit against the portfolio from your local bank. What happens to the ...
RandomJo231's user avatar
0 votes
1 answer
98 views

Extension risk with IO bonds

I'm trying to understand the extension risk associated with interest only bonds in a CMO. When rates rise, prepayments drop, and so the life of the IO bonds is extended. This causes the value of the ...
Skrrrrrtttt's user avatar
0 votes
3 answers
175 views

collateralized mortgage obligations

I was reading a comparative description in between CDO's and CMO's on Investopedia.com and I cant seem to understand the following statement: When the mortgages underlying a CMO are of poor credit ...
Mustard Tiger's user avatar
1 vote
3 answers
529 views

What is a tranche?

I am studying Collateralized Mortgage Obligations (CMOs) - My understanding is that the product consists of mortgages which have real estate as collateral. The mortgages are bundled in batches which ...
Martha de Forest's user avatar
2 votes
1 answer
106 views

How a mortgage backed security fluctuates

If I buy a mortgage backed security, what will happen to my investment if: The person that took out the mortgage defaults The person makes a prepayment The person refinances The bank that gave ...
Victor123's user avatar
  • 16k
3 votes
4 answers
12k views

"Derivative" and "asset-backed security": Same concept, or related?

Derivative and asset-backed security seem to be similar, as both are based on some other assets. So I wonder if they are the same concept?
Tim's user avatar
  • 5,883