Question

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

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

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.

2.

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.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
-Briefly describe the types of risk faced by investors in domestic bonds. Indicate the additional risks...
-Briefly describe the types of risk faced by investors in domestic bonds. Indicate the additional risks associated with nondomestic bonds.
Identify and briefly discuss the market risks attached to cryptocurrencies and their effect on the value...
Identify and briefly discuss the market risks attached to cryptocurrencies and their effect on the value of financial securities and bonds?
Mortgage-backed securities are some of the most complex investment vehicles in the market today. Yet despite...
Mortgage-backed securities are some of the most complex investment vehicles in the market today. Yet despite this complexity and investor experiences during the Mortgage Crisis, there are more than $9 trillion of outstanding mortgages securitized as of 2015. Discuss the reason for the continued popularity of mortgage-backed securities (MBS) and whether they are a safer investment in today's markets. Provide evidence to support your assertions.
You have choice of purchasing two mortgage backed securities: a convention bond and a zero coupon...
You have choice of purchasing two mortgage backed securities: a convention bond and a zero coupon bond. Both bonds have a $10,000 par value. The conventional bond pays interest semi-annually and has a 8.75 percent coupon. The second bond is a zero coupon structure. You require a 10.50% return. What are the bond prices?
1. What is a mortgage-backed security? Who issues these securities? 2. Which bond ratings can be...
1. What is a mortgage-backed security? Who issues these securities? 2. Which bond ratings can be considered investment grade? Junk bonds? 3. How does a mutual fund work? 4. What are ETFs?
In order to sell the mortgage-backed securities to the pension fund managers (who require low-risk securities)...
In order to sell the mortgage-backed securities to the pension fund managers (who require low-risk securities) and hedge fund managers (who require high-yield securities), the investment bank decides it will need to turn the MBSs into collateralized mortgage obligations that are segmented into three tranches. The first tranche investors get paid before the investors in the remaining two tranches, the second tranche investors get paid after the first tranche investors and before the third tranche investors, and the third tranche...
A. Bonds that derived their value from mortgage backed securities are also known as what? Derivatives....
A. Bonds that derived their value from mortgage backed securities are also known as what? Derivatives. Treasury bonds. Private securities. Government IOU’s. B. Suppose , where L is labor and K is capital. Consider the production curve Y = 4. Which pair of inputs will produce 4 units of output for the given production function? (1, 1), (1, 1) (2, 1), (1, 2) (4, 1), (1, 4) (0, 1), (1, 0) B. Suppose Y = 2Min{L, K, 2R} . Which...
Briefly discuss ROAs in commercial banks. What is a typical range for this metric and why...
Briefly discuss ROAs in commercial banks. What is a typical range for this metric and why would investors accept an ROA is that range? Also, briefly describe why a bank's ROE may be very different from its ROA.
Consider the scenario, where in the production of product A there are two types of risks....
Consider the scenario, where in the production of product A there are two types of risks. There is a risk to the health of the workers involved in the production of the good and there is a potential risk to the final consumers of the product. Which of these risks (if revealed) would lead to an efficient market allocation of the good? Briefly explain.
1) Overnight loans issued by the Federal Reserve to commercial banks are known as A. Negotiable...
1) Overnight loans issued by the Federal Reserve to commercial banks are known as A. Negotiable CD's B. Federal funds C. Repurchase agreements D. Commercial paper 2) Which type of security has interest payments that are generally exempt from federal income taxes? A. Mortgage-backed securities B. Treasury bonds C. Municipal bonds D. Commercial loans 3) What do the authors mean when they state that financial intermediaries can achieve economies of scale with respect to transaction costs? A. Intermediaries can spread...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT