through the model of a lottery with a high and a low outcome, argue whether a CDO made of central tranches (all tranches except AAA or Z) of a group of MBS’s can legitimately contain a AAA tranche that is comparable to those in the MBS’s. Explain the economics of why you believe they did contain AAA rated tranches.
through the model of a lottery with a high and a low outcome, argue whether a CDO made of central tranches (all tranches except AAA or Z) of a group of MBS’s can legitimately contain a AAA tranche that is comparable to those in the MBS’s. Explain the economics of why you believe they did contain AAA rated tranches.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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through the model of a lottery with a high and a low outcome, argue whether a CDO made of central tranches (all tranches except AAA or Z) of a group of MBS’s can legitimately contain a AAA tranche that is comparable to those in the MBS’s. Explain the economics of why you believe they did contain AAA rated tranches.
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