Alternative investments, such as hedge funds, private equity/private debt and private real estate funds, are speculative and involve a high degree of risk that is suitable only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program. They entail significant risks that can include losses due to leveraging or other speculative investment practices, lack of liquidity, volatility of returns, restrictions on transferring interests in a fund, potential lack of diversification, absence and/or delay of information regarding valuations and pricing, complex tax structures and delays in tax reporting, less regulation and higher fees than mutual funds. Hedge fund, private equity, private debt and private real estate fund investing involves other material risks including capital loss and the loss of the entire amount invested. A fund's offering documents should be carefully reviewed prior to investing.
Through its first quantitative easing (QE) program, the Federal Reserve (Fed) began purchasing agency mortgage-backed securities (MBS) in November 2008 and US Treasuries (USTs) in March 2009. Since ending its third asset purchase program (QE3) in 2014, the Fed has continued to participate actively i...
The difference between the two mortgage markets is significant; theAmerican market has a free link between funding and lending, where the Danish market in manyyears has been characterized by mortgage backed securities where interest and principle paymentsare passed through to the final investor.
Theissuers of Danish mortgage backed securities are not allowed to sell of the credit risk on themortgages which, on the contrary, is possible in America.
What factors led to the mortgage default crisis? How did mortgage defaults affect banks involved in mortgage lending and mortgage investing? Securitization? TARP? What do these mean? How did mortgage-backed securities spread losses during the mortgage default crisis? How does TARP illustrate the problem of moral hazard? What did the Federal Reserve do during the financial crisis of 2008 and 2009? How did the recent financial crisis affect the financial services industry? What are some of the major provisions of the Wall Street Reform and Consumer Protection Act?
Investment characteristics of mortgages and the structure and operation of mortgage markets – both primary and secondary, including the role of securitization. Risk and return characteristics of various mortgage instruments, both residential and commercial, are analyzed from the perspective of both the borrower and lender. Tools for measuring and managing the risks of portfolios of mortgages and mortgage-backed securities are introduced.
...itutions will sell out their loans by securitization instead of holding loans themselves. The risk of mortgage loans includes credit risk, liquidity risk, interest rate risk, prepayment riskand so on =-=[3, 7]-=-. By securitization, it becomes possible that many investors and financial institutions share these risks, instead of a financial institution taking the whole risks. The product of mortgage securitiza...
We want to look at these decisions under critical lenses in order tohave a motivated say in judging the actions that the FED is currently implementing torespond to the subprime crisis.
With the historical tight connection between funding and lending of the Danish mortgage backedsecurities, many of the problems in the American market are not found in the Danish.
HFRI ED: Distressed/Restructuring Index. Strategies focus on corporate fixed-income instruments, primarily corporate credit instruments of companies trading at significant discounts to their value at issuance or obliged (par value) at maturity as a result of either formal bankruptcy proceedings or financial-market perception of near-term proceedings. Managers are typically actively involved with the management of these companies; they are frequently involved on creditors’ committees in negotiating the exchange of securities for alternative obligations, either swaps of debt, equity or hybrid securities. Managers employ fundamental credit processes focused on valuation and asset coverage of securities of distressed firms; in most cases portfolio exposures are concentrated in instruments that are publicly traded, in some cases actively and in others under reduced liquidity but in general for which a reasonable public market exists. Strategies employ primarily debt (greater than 60 percent) but also may maintain related equity exposure.
Many of the ratings didturn out to be too optimistic and thus the investors in American mortgage backed securitiesexperienced losses and writedowns as a consequence.
The moral hazard problems in the structure of the Americanmortgage backed securities market cause an increased complexity in the securities which increasesthe need for credit rating agencies to ensure the quality of the securities.
At $7.9 trillion in market value, residential and commercial mortgage-backed securities (MBS) comprise over 20% of the US fixed-income universe. By adding significant yield and diversification against other asset classes, residential and commercial MBS play an important role in investors’ overall bo...