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Briefly discuss atleast two types of risks that investors of Commercial Mortgage Backed Securities ( CMBS)...

Briefly discuss atleast two types of risks that investors of Commercial Mortgage Backed Securities ( CMBS) bonds encounter

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Answer #1

There are various risk associated with CMBS like lac of control, due deligience risk, changes in tax laws, social unrest, decline in the value of property.

1.

Lack of control - Investment of CMBS funds are with the adminstration and not with the investors. These desicion are amde by trustee, fund manager etc.

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Management risk - As the scheme is managed by the manager or fund driver therefore gain or loss if totally dependent on the decision of there investment therefore ti is riskier for the investors.

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