Question

Why does the dollar roll market exist? Explain this using all participants in both the primary...

Why does the dollar roll market exist? Explain this using all participants in both the primary and secondary markets, from the prospective mortgagor to the dealer and investor in the secondary market.

please explain from  

Originator -

Dealer -

Investor -

Homework Answers

Answer #1

A dollar roll is a type of repurchase transaction in the mortgage pass-through securities market in which the buy side trade counterparty of a "to be announced" (TBA) trade agrees to a sell off the same TBA trade in the current month and to a buy back the same trade in a future month.

Originator wishes to purchase rolls to push their hedge out to a further date.

For Dealer- Dollar Roll market exists as a mechanism to "borrow" pass-throughs they had sold short.

An investor sells an outright contract and wishes to push it out one month, they would then have to "buy and sell" in the one-month roll market.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why does the dollar roll market exist? Explain this using all participants in both the primary...
Why does the dollar roll market exist? Explain this using all participants in both the primary and secondary markets, from the prospective mortgagor to the dealer and investor in the secondary market.
1a. In your local Ford retailer, both a primary and a secondary market are in action....
1a. In your local Ford retailer, both a primary and a secondary market are in action. Explain. Is the Ford retailer a dealer or a broker? b)What does it mean to sell a security short? Why might you do it?
1A Further Public Offering (FPO) is made on which market: Primary Market Secondary Market Third Market...
1A Further Public Offering (FPO) is made on which market: Primary Market Secondary Market Third Market Fourth Market 2The difference between the primary and secondary markets include: Primary markets and secondary markets have fixed stock prices The primary market is not subject to commissions nor is the secondary market Primary markets and secondary markets are both open for an unlimited period of time The primary market is not subject to commissions and the secondary market is subject to commissions 3The...
Explain the difference between primary and secondary markets and why secondary markets are so important to...
Explain the difference between primary and secondary markets and why secondary markets are so important to businesses that need to raise capital? Give examples from the real world? Please no picture, thank you
Why does no reaction exist when the reactants are NaNO3 + AgCLO4 Please explain
Why does no reaction exist when the reactants are NaNO3 + AgCLO4 Please explain
Explain why it’s important to conduct research using both male and female participants. What sociological or...
Explain why it’s important to conduct research using both male and female participants. What sociological or ethical topics might show gender differences? Provide some examples to illustrate your ideas.
why does mutual gains must exist from trade. explain reasoning
why does mutual gains must exist from trade. explain reasoning
For each of the following, either draw a graph or explain why one does not exist:...
For each of the following, either draw a graph or explain why one does not exist: a) Circuit-free graph, 6 vertices, 4 edges b) Graph, 5 vertices, all of degree 3 c) Complete graph, 4 vertices, has an Euler circuit d) Complete graph, 4 vertices, has a Hamiltonian circuit
What exactly does the efficient market hypothesis contend about prices in the stock market and the...
What exactly does the efficient market hypothesis contend about prices in the stock market and the ability for an individual investor to consistently beat the market? 2. What exactly is an asset bubble and what evidence does Thaler provide that a housing bubble was forming starting in 2000? 3. What does Thaler say that he would do if he were in charge of the Federal Reserve and spotted scenarios like Scottsdale and Las Vegas occurring in the market? 4. Does...
Calculate each limit below, if it exists. If a limit does not exist, explain why. Show...
Calculate each limit below, if it exists. If a limit does not exist, explain why. Show all work. \lim _{x\to 3}\left(\frac{x-3}{\sqrt{2x+3}-\sqrt{3x}}\right) \lim _{x\to -\infty }\left(\frac{\sqrt{x^2+3x}}{3x+1}\right)