To buy CDS on a fixed income asset you must own the asset.   Question 3 options:   True   False

A CDO is a debt security collateralized by debt obligations, such as residential and commercial mortgage backed securities.   Question 19 options:   True   False

M1

Question 2 In a real estate short sale the balance owed on the mortgage falls short of the proceeds of the sale. True False

Multiple ChoiceIdentify the choice that best completes the statement or answers the question.      9.  For a liability to exist, a. a past transaction or event must have occurred. b. the exact amount must be known. c. the identity of the party owed must be known. d. an obligation to pay cash in the future must exist.      10.  The effective interest rate on bonds is higher than the stated rate when bonds sell a. at face value. b. above face value. c. below face value. d. at maturity value.      11.  The effective interest rate on bonds is lower than the stated rate when bonds sell a. at maturity value. b. above face value. c. below face value. d. at face value.      12.  When interest expense is calculated using the effective-interest amortization method, interest expense (assuming that interest is paid annually) always equals the a. actual amount of interest paid. b. book value of the…

In order for the seller of securitized securities to remove the assets (i.e. mortgages) from the balance sheet, the sale must a. have a service agreement b. be overcollateralized c. be without recourse d. be made at a discount (original issue discount)

Explain

Which of the following security instruments, if any, does not allow the debtor the right of redemption upon default? a. Mortgage foreclosure by "action and sale" b. "Strict foreclosure" of mortgage c. Debtors have a right to redeem property under all of these security instruments. d. Deed of trust e. Mortgage foreclosure by "power of sale"

A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For example,______able to effectively transfer some or all of the risk of a__________defaulting to a third party in exchange for a __________.

Total project value ($) Debt Option Loan-to-value Rate (%) Interest only period (years) Amortization (years) $35,000,000.00 A 65% 3.25% 3 20 B 70% 3.25% 3 30 C 70% 3.00% 0 30 D 50% 4.25% 0 30