What is Securitization of Loans? Explain Mortgage-backed loans.

/in /by

Types of Loan

What is Securitization of Loans? Explain Mortgage-backed loans.

WHAT IS THE SCOPE OF TRANSACTIONS TO WHICH THE BAN ON RIBA IS APPLICABLE ? DOES THE TERM APPLY ONLY TO THE INTEREST CHARGED ON CONSUMPTION LOANS OR DOES IT ALSO COVER PRODUCTIVE LOANS ADVANCED BY BANKING AND FINANCIAL INSTITUTIONS ?

/in /by

Islamic finance

Q1/ WHAT IS THE SCOPE OF TRANSACTIONS TO WHICH THE BAN ON RIBA IS APPLICABLE ? DOES THE TERM APPLY ONLY TO THE INTEREST CHARGED ON CONSUMPTION LOANS OR DOES IT ALSO COVER PRODUCTIVE LOANS ADVANCED BY BANKING AND FINANCIAL INSTITUTIONS ?

Q2\ CAN A MUSLIM COUNTRY TRANSFORM ITS ECONOMY SUCCESSFULLY TO ISLAMIC FINANCE ? WHAT ARE THE PREREQUISITES FOR SUCCESS ?

Q3/ IN THE ABSENCE OF LENDING AT A RATE OF INTEREST , WHAT MODES OF FINANCING CAN BE USED FOR:

  • A ) TRADE AND INDUSTRY FINANCE ,
  • B) FINANCING THE BUDGET DEFICIT ,
  • C ) ACQUIRING FOREIGN LOANS

Q4) Why does Islamic finance exist ? Why is Islamic finance a sizeable and growing market ?

 

 

Formulate the steps of the portfolio management process and explain the components of those steps in detail.

/in /by

Portfolio management process

Formulate the steps of the portfolio management process and explain the components of those steps in detail.

 

Do the potential monetary benefits outweigh the odds of causing harm to a small group of people? Would the profits be substantial enough to risk a major liability lawsuit?

/in /by

Halt Production of AutoSensor

Jack Connor is facing a dilema with no easy or clear-cut answer. In making his decision he must weigh such concepts as potential harm, acceptable risk, market value, and liability. In the marketing of consumer products and devices, there is always the possibility that some use (or misuse) of the item will result in injury or death. Often these dangers are unforeseen until the product is in wide production and the companies responsible are then judged for their response. Jack’s choice is about whether to proactively avoid the risk, or to continue with the production plan for AutoSensor, hoping that the warnings were unfounded.
The factors complicating Jack’s choice are the dueling demands of financial responsibility and social responsibility. Do the potential monetary benefits outweigh the odds of causing harm to a small group of people? Would the profits be substantial enough to risk a major liability lawsuit? In that case he should continue with the production of the AutoSensor system.

Or, do the risks of harm outweigh the benefits to his company? Are there factors other than financial that Jack should consider, such as the social perception of his company or the human impact on even his own family? In that case he should halt production and either redesign or discontinue the product.
What do you think? What would you recommend for Jack? What would you do?
Group B: Halt Production of AutoSensor

Discuss issues raised concerning Sanders’ approach in connection with the sale to Brown and Massey. Include some of the other options that Sanders may have considered other than the $2,000,000 cash price. Explain the reasons for regulatory control over financial markets.

/in /by

Summarize the following in 2 to 3 pages:

  • Discuss issues raised concerning Sanders’ approach in connection with the sale to Brown and Massey.
  • Include some of the other options that Sanders may have considered other than the $2,000,000 cash price.
  • Explain the reasons for regulatory control over financial markets.

Let’s assume Colonel Sanders obtained a six-month loan of $150,000 Canadian dollars from an American bank to finance the acquisition of a building for another Canadian franchise in Quebec province. The loan will be repaid in Canadian dollars. At the time of the loan, the spot exchange rate was U.S. $0.8995/Canadian dollar and the Canadian currency was selling at a discount in the forward market. The contract after six months (face value = C$150,000 per contract) was quoted at U.S. $0.8930/Canadian dollar.

  • Explain how the American bank could lose on this transaction assuming no hedging.
  • Assume the bank does hedge with the forward contract, what is the maximum amount it can lose?

 

Write 750 words identifying four of the financial statements a for-profit organization will compile. Define them, and then describe how they interact with each other.

/in /by

Financial statements a for-profit organization

Write 750 words identifying four of the financial statements a for-profit organization will compile. Define them, and then describe how they interact with each other.

Your paper should be in APA format, citing support from articles published within the past 8 weeks.

 

Write a process essay on ways to save money. Differentiate way to save money explaining step by step on how to save money in a, examples, savings account or a budget.

/in /by

Ways to save money

Write a process essay on ways to save money. Differentiate way to save money explaining step by step on how to save money in a, examples, savings account or a budget.

Explain the impact of working capital management on the business’s operations. Provide examples to support your claims. Explain how a business finances its operations and expansion.

/in /by

Johnson & Johnson: Comparison Analysis

Competencies
In this project, you will demonstrate your mastery of the following competencies:

Analyze financial and investment decisions that add value to the organization
Analyze financing options to maximize investor value

Scenario
You chose a business during your Module Two journal assignment. Imagine you are an analyst for that business. Your business’s board of directors wants updates on the business’s financial health. Your supervisor has asked you to write a report that includes the following:

The business’s current financial health
The available financial options for improving the business
Your recommendations about which options will support the business’s financial health
Your supervisor will present your report to the business’s board of directors. The board members have different levels of knowledge about finance. You must write the report so it is easy for all board members to understand.

Directions
Create a report for your supervisor to share with the board of directors during their presentation. Use the business you chose from the Project Two Business Options List. Use Mergent Online to find the most recent quarterly financial statements for your company. Use these statements to support your analysis during the project. Use the Project Two Financial Assumptions document for descriptions of the three financial options you will evaluate. Use the Project Two Financial Analysis Report template to complete this project.

Note: All documents and resources that are needed to complete this assignment are linked in the What to Submit and Supporting Materials sections.

Specifically, you must address the following rubric criteria:

Financial Analysis: For this section, you will start with calculating the financial formulas listed in Part A. Use the most recent quarterly financial statements from your chosen business and the Project Two Financial Formulas worksheet.
Financial Calculations: Accurately calculate financial formulas to figure out the business’s current financial health. You must calculate the following:

  • Working capital
  • Current ratio
  • Debt ratio
  • Earnings per share
  • Price/earnings ratio
  • Total asset turnover ratio
  • Financial leverage
  • Net profit margin
  • Return on assets
  • Return on equity

Working Capital Management: Explain the impact of working capital management on the business’s operations. Provide examples to support your claims.

Financing: Explain how a business finances its operations and expansion.

Short-Term Financing: Explain how potential short-term financing sources could help the business raise funds for improving its financial health. Base your response on the business’s current financial information.

Bond Investment: Discuss the risks and benefits of the business investing in a corporate bond. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis. Use the Project Two Financial Assumptions document and the Bonds section of the Net Present Value (NPV) worksheet in the Project Two Financial Formulas workbook.

Capital Equipment: Discuss the risks and benefits of the business investing in capital equipment. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis. Use the Project Two Financial Assumptions document and the Equipment section of the Net Present Value (NPV) worksheet in the Project Two Financial Formulas workbook.

Building: Discuss the risks and benefits of the business investing in a building. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis. Use the Project Two Financial Assumptions document and the Building section of the NPV worksheet in the Project Two Financial Formulas workbook.

Financial Evaluation: In this section of the report, you will determine which of the three available investments are good financing options and describe the business’s likely future financial performance.

Bond Investment: Determine if the bond investment is a good financing option for the business’s financial health. Use your financial analysis and other financial information to your support claims.

Capital Equipment: Determine if the capital equipment investment is a good financing option for the business’s financial health. Use your financial analysis and other financial information to support your claims.

Building: Determine if the building purchase is a good financing option for the business’s financial health. Use your financial analysis and other financial information to support your claims.

Future Financial Considerations: Describe the business’s likely future financial performance. Base your description on the business’s current financial well-being and risk levels. Use financial information to support your claims.

Pick a company in an industry that they like or know or would like to get to know, and provide a thoughtful analysis on that company using the relevant ratios learned in class to help tell that company’s story.

/in /by

Homework 2

Prompt:
Students are to pick a company in an industry that they like or know or would like to get to know, and provide a thoughtful analysis on that company using the relevant ratios learned in class to
help tell that company’s story.

The write-up will be no more than two/double-spaced pages that discuss both the qualitative and quantitative reasons why you like or dislike the company that you’ve chosen. Students should utilize any financial documents they deem appropriate for the analysis (10-K, 10-Q, etc,.) and any data utilized should be for the year ended 2021.
Students are not allowed to select the following companies for their Homework 2 write-up:
Coca-Cola, Peloton, or Bank of Princeton.

Formatting:
The paper should be 1.5 – 2 pages in length, but no more than 2 pages in length. Papers should be formatted in size 12 font, Times New Roman, and should be double spaced. Citations are not
necessary.

  • The outline of your write-up should be as follows:
  • Name/Class/ID number
  • Company Name & Industry
  • Description of Company (2-3 sentences only)
  • Summary (do this post-completion of Company Positives and Negatives)
  • Company and/or Industry Positives
  • Company and/or Industry Negatives

If students do not follow instructions on both the two page length and the format, each issue will cause one point to be deducted from this assignment out of a total of 5 possible points. Submit all papers in either PDF or Word

Now suppose that there is an unanticipated increase in the rate of default, from 5% to 10%. Determine the expected value of a loan and the standard deviation with the new default rate. The mortgagebacked security had guaranteed a payment of $109.25. Is that payment still possible with the higher default rate? Explain.

/in /by

Economics 2121 Pamela Labadie

This assignment is based on the notes “Risk, Return and Leverage.”

Securitization provides a way to diversify idiosyncratic risk. You are given an example in the notes of a $ 100 loan with a default rate of 5 %. For 100 households, 95 pay $115 and 5 pay nothing. The mortgage-backed security created by pooling the loans guaranteed a payment of $109.25 to each of the 100 lenders.

  • Now suppose that there is an unanticipated increase in the rate of default, from 5% to 10%. Determine the expected value of a loan and the standard deviation with the new default rate. The mortgagebacked security had guaranteed a payment of $109.25. Is that payment still possible with the higher default rate? Explain.

We will use the example above and interpret this as health insurance. Suppose there are 100 people: 95 people will be healthy and 5 will be sick, but at the time the insurance is purchased, no one knows who will be sick. Assume purchase of insurance is mandatory. If you are healthy, you incur no health costs. If you become sick, you incur costs of $115. The total health expenses for the 5 people will equal $575 (so 5 times 115). If all 100 people split the cost of the illness, what is the insurance premium paid by each person? Show that this payment is equal to the probability of illness times the cost per person, or the expected value of health costs for an individual.

An important part of the statement of the problem was the assumption insurance purchase is mandatory. Suppose that insurance purchase is not mandatory and there is a no pre-condition clause, meaning you cannot be denied insurance coverage because of a pre-condition. Explain how the absence of mandatory insurance plus the no pre-condition clause leads to an adverse selection problem.

The leverage ratio, which we have defined as

  • Assets Capital 1 is sometimes defined as Liabilities Capital Recall that Assets = Liabilities + Capital
  • Divide both sides of this equation by capital. You are told Liabilities Capital = 33
  • Determine the leverage ratio when it is defined as Assets Capital

In a repurchase agreement an asset, often a Treasury bond, is used as collateral. Let P denote the market price of the bond. The bond is often sold with a “haircut,” meaning the price of the bond for the transaction is below the market price. Let p be the price of the bond in the repo agreement. Then p < P. The haircut is the percentage based on p P. For example, if the market price of the bond is $10,000, the borrower sells the bond for a discount, say $9,000 so the haircut is 10 percent (so the ratio 9000 10000 = 0.9 so the value of the bond has been “shaved” by 10 percent). Recall in the repo, the borrower sells a bond as collateral and then turns around an agrees to repurchase it at a higher price at some point in the future. Provide some reasons why there might be a haircut in the transaction. In way is the haircut like a down payment on a loan?

This is a question about amortization. Amortization is an accounting technique used to lower the book value of a loan over the life of the loan. Suppose you take out a 3 year loan for $100,000 at interest rate of 5 percent. This is a fixed rate loan.

  • (a) Determine the constant loan payment so the the loan is paid off in five years. Call this dollar amount x.
  • (b) One time period goes by. The loan payment is made and there are two more payments of x dollars to be made. Determine the discounted present value of the remaining loan payments. This is the amount that will be recorded on the balance sheet after the first payment is received and this is the process of amortizing a loan. 2
  • (c) At the start (time t) the interest rate is 5 percent. At time t + 1, the interest rate rises to 7 percent (assume this increase is unanticipated). Determine the discounted present value of the two remaining payments of x. This would be the fair value or marked to market accounting value.

Use data from the Federal Reserve Bank of St. Louis to plot the 10 year minus the 2 year Treasury rate. Describe what the current spread implies about the slope of the yield curve