To: Sunnyflorida
Securitizations are over-collateralized, that is they are sold at a discount to the principal amount. Either the cash flow from a security is covering its debt service or it isn't.
Next time don't be so churlish.
48 posted on
09/26/2008 10:31:28 AM PDT by
kenavi
(BHO: The only constant is change.)
To: kenavi
There is more than securitization there are also the swaps. These are more like insurance products. Cash flow is not the main valuation. Risk of default needs to be taken into consideration. DCF is a terrible way to value variable or risk instruments. There is no “rational” D with these things.
Next time don’t be so churlish.
56 posted on
09/26/2008 11:48:55 AM PDT by
Sunnyflorida
(Unless you are nice and thoughtful you will be ignored. Write in Thomas Sowell.)
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