Question
In each case of the creation of MRSs, the cash flows from a pool of mortgages are delivered, often rearranged in terms of amount and
In each case of the creation of MRSs, the cash flows from a pool of mortgages are delivered, often rearranged in terms of amount and timing, to investors in the securities. No additional cash flows are added to the pool. Cash flows are available to investors come from the pool only. In fact, some cash flows are absorbed by the owners of the additional resources used to create the MRSs. Such parties as underwriters, investment bankers, trustees that hold the mortgages, security brokers, and their staffs absorb cash flows from mortgage pools. The question that presents itself is this: How can value be created through a system that does not add additional productive resources, but rather absorbs cash flows from the existing portfolio?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started