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留学生金融工程论文之资金证券化风险安全管理-Describe with diagram(s) (or flow char

留学生金融工程论文这是我曾经做过的作业的一部分,可以让你对我们学校的reference系统,什么是securitization, 以及我们的写作风格有个了解。很明显,我们不能照着文献抄,需要总结各家的看法,以及提出自己的看法。Describe with diagram(s) (or flow chart(s)) how Securitization can be varyingly constructed. How can this funding technique varyingly distribute risk?

Securitization refers to a process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a security. The cash flows associated with the existing financial assets are used to service funding raised through the issue of asset-backed securities.
Diagram above shows the securitisation process of a mortgage-backed security, however it also reflects a general process of securitization. First, the financial assets, in this case mortgage loans are accumulate on the balance sheet and then reviewed on the basis of interest rates, liquidity and credit risk. Assets with similar characteristics are pooled together and sold into a special purpose vehicle (SPV). Then the trustee issues new securities to investors. Service manager is appointed to manage the cash flows: repayments from borrowers, known as inflows, and payment of interest and principal on securities issued by trustee – outflows. Received cash flows from the original assets are used by the SPV to repay interest and principal due on securities issued to investors
Securitisation transforms non-tradable risk factors into tradable financial securities with the goal of transferring external risks to capital markets. For example, if a bank issues a large loan and want to reduce its exposure to risk, it can choose to syndicate the loan. However, it will induce extra costs and the benefits of a potentially profitable lending relationship will have to be shared. Another option of reducing risks is Credit Default Swaps. Purchasing CDS allows the bank to reduce the default risks while still handling the loan on its own. Almost any desired risk portfolio can be created by a combination of various types of credit derivatives. If an investor wants to bear the default risks associated with specific company, but not the default risk related to the industry on the whole, he can purchase derivatives that would compensate the lender in the event of an industry downturn. (Partnoy and Skeel, 2006)
Partnoy and Skeel (2006) outline a number of reforms regarding disclosure and credit ratings that might help resolve some of the costs associated with securitised instruments.
With regards to disclosure Partnoy and Skeel (2006) argue that disclosure should with respect to credit default swaps (CDS’s) and collateralised debt obligations (CDO’s). In general credit derivatives are unregulated and fall within statutory exemptions of over the counter derivatives.
Firstly they argue that with respect to CDS’s , the ISDA should make all documentation in relation to credit derivatives freely available online implying that the ISDA should halt its practice of making market participants pay fees for documents. Secondly Partnoy and Skeel (2008) indicate that market participants should be demanded to publish credit derivative transactions through a service like SEC edgar service. The third reform in relation to disclosure they outline is that a pricing service for credit derivatives be centralised through broker services making historical prices accessible to the public and that credit rating agencies such as Standard and Poor’s make data about CDO’s available on their websites. The last reform they outline should be undertaken is for companies that are already reporting companies should include descriptions of the effects of credit derivatives in narrative piece of writing in management’s discussion and analysis of results and operations on their financial filings especially on their exposure to risk from credit derivatives.

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